Caiculator Contingent Liabilities Several months ago, Ayers Industries Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $500,000. The company is contesting the fine. In addition, an employee is seeking $600,000 in damages related to the spil. Lastly, a homeowner has sued the company for $320,000. The homeowner lives 30 miles from the plant, but belleves that the incident has reduced the home's resale value by $320,000. Ayers' legal counsel believes that it is probable that the EPA fine will stand. In addition, counsel indicates that an out-of court settlement of $260,000 has recently been reached with the employee. The final papers will be signed next week. Counsel beleves that the homeowner's case is much weaker and will be decided in favor of Ayers. Other litigation related to the spill is possible, but the damage amounts are uncertain. a Journalize the contingent liabilities associated with the hazardous materials spa use the account-Damage A ards and Fires to recognize the expense for the period ? an an urt bex does not require an entry, leave it blank b. The company experienced a hazardous materials spill at one of its plants ouring the previous perlod. This spil has resulted in a number of lawsuts to which the company is a party. The Environmental Protection Agency (EPA) has fined the company, which the company is contesting in court Although the company believes that the fine payment is and out-of-court settlement have been recopnized as the lawsuilt has merit. Other lawsuits and unknown liablities may arise frem this indident admit fault, legal counsel tn addrion, an emploree has sued the company Aout o court seesement has been reached with the employe. The LPA foe out of court settlement has been reached with the employee. The EPA fine for the period. There is one other outstanding lawsuit related to this indident. Counsel beleve tha 2 more Che My work uses remaining