CompanyA in January of 2015,was told they would be fined for violating state regulations.After discussing it with their attorney's they received a possible range ofbetween $150,000to $400,000 in liability for the violation. When the financial statements were issued in 2015,a settlement had not been made with state authorities,so they accrued a contingentliability of$175,000.Late in 2016, a settlement was reached with state authorities to pay a total of $350,000 in penalties.

For each of the situations described above, provide the information indicated below assuming it is December 2016. .

1. Type of accounting change.

2. Manner of reporting the change under current generally accepted accounting principles including

a discussion, where applicable, of how amounts are computed.

3. Effect of the change on the balance sheet and income statement.

4. Footnote disclosures that would be necessary.