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Contingent liability for any of probable payouts in future

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Reference no: EM132735837

Consider this example of the Full Disclosure principle:

A train derails and causes significant personal and property damage. At year end, claims are still being filed by the injured parties and there are quite a few lawsuits asking for outrageous money.

1. Would you accrue a "contingent" liability for any of the probable payouts in the future?

2. How would you go about estimating the potential liability from this incident?

3. The Footnotes to the financial statements are also a form of disclosure. Should any amount not be accrued and only disclosed in the footnotes?

4. Why bother?

Reference no: EM132735837

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