Monsanto’s 2015 annual report stated that the company’s liabilities for environmental remediation and litigation contingencies are $194 million as of 8/31/15 ($184 million as of 8/31/14).
a. Describe how the liabilities affected the basic accounting equation.
b. What accounting principle is being followed by Monsanto? Explain.
c. Assume $25 million was actually spent in 2015 to re-mediate environmental problems. Draw a T-account and reconstruct 2015 changes for contingencies.