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    This posting addresses environmental liability treatment.

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    Wilson Company is involved in a litigation suit concerning the clean-up of old underground oil storage tanks on property it sold to a housing development company five years ago. The attorneys for Wilson Company cannot give a best estimate for the probable liability; however, the attorneys state that the liability to Wilson Company will probably fall within a range of $2 million to $10 million. According to the SEC, what should Wilson Company record with regards to this environmental liability?
    Choose one answer.

    a. No entry is required.

    b. A loss and liability of $10 million.

    c. A loss and liability of $6 million.

    d. A loss and liability of $2 million.

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    Solution Summary

    The solution provides the correct answer to the Wilson Company multiple choice question, which examines what Wilson Company should record with regards to their environmental liability.