Toyota is a car manufacturer that has issued several recalls over the years. One major recall centered on faulty air bags from Takata. A prior recall focused on unintentional pedal acceleration. Research information about the car manufacturer, and one of the two recall situations described. Answer the following questions:
• What are some of the main points discussed in the supplements you researched?
• What negative impact did this recall have on Toyota?
• As a result of the recall, what contingent liabilities were (or could be) created?
• How did Toyota handle the reporting of these contingent liabilities?
• How did Toyota determine the estimated liability amounts?
• Do you agree with Toyota’s treatment assignment for reported liabilities (probable and estimable, probable and inestimable, for example)?
• What note disclosures accompanied the recognized contingent liabilities?
• What long-term effect, if any, did the recall have on Toyota’s financials and reputation?