Problem on accounting recognition

Reference no: EM13153492

Ortiz Corporation, a manufacturer of household paints, is preparing annual financial statements at December 31, 2010. Because of a recently proven health hazard in one of its paints, the government has clearly indicated its intention of having Ortiz recall all cans of this paint sold in the last six months. The management of Ortiz estimates that this recall would cost $800,000. What accounting recognition, if any, should be accorded this situation?

Reference no: EM13153492

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