Question

The Environmental Protection Agency (EPA) is in the process of investigating a possible water contamination issue at the manufacturing facility of Northwest Forest Products. The EPA has not yet proposed a penalty assessment Management feels an assessment is reasonably possible, and if an assessment is made, an unfavorable settlement is estimated between $20 and $30 million Which of the following statements is true? Multiple Choice A loss must be recorded for $20 million and a liability must be recorded for $30 million. o A disclosure note should be included in the financial statements, without an entry. o ) Aloss must be recorded for $30 million and a liability must be recorded for $20 million A loss and a liability must be recorded for $20 million.

Answer 1

Answer:The potiential loss and liability should not be recorded but should be disclosed in the notes to the financial statements.

Step-by-step explanation: