What poison ltd should accrue

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Problem 1: Poison Ltd. is currently facing a lawsuit as negligence on their part related to the dumping of chemicals is claimed to have poisoned residents in the city of their operations. Poison Ltd.'s legal team believes that it's likely Poison Ltd. will not win this lawsuit and ultimately be liable to the residents of the city, in an amount ranging from $200,000 to $1,400,000. The legal team does believe, however, that $800,000 is most likely. Accordingly, following ASPE, Poison Ltd. should accrue

Option 1: a loss contingency of $200,000 and disclose an additional contingency of up to $1,200,000.
Option 2: a loss contingency of $800,000 but not disclose any additional contingency.
Option 3: a loss contingency of $800,000 and disclose an additional contingency of up to $600,000.
Option 4: no loss contingency but disclose a contingency of $200,000 to $1,400,000.

Reference no: EM132820940

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