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.
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