Question
Contingent liabilities abound in the real world. Consider the following: Manville Corporation filed for bankruptcy when it was hit by billions of dollars in asbestos
Contingent liabilities abound in the real world. Consider the following: Manville Corporation filed for bankruptcy when it was hit by billions of dollars in asbestos product-liability claims. Companies having multiple toxic waste sites are faced with cleanup costs that average $10 to $30 million and can reach as high as $500 million depending on the type of waste. For life and health insurance companies and their stockholders, the cost of diseases such as diabetes, Alzheimer's, and AIDS is like an iceberg: Everyone wonders how big such costs really are and what damage they might do in the future. And frequent-flyer programs are so popular that airlines at one time owed participants more than 3 million round-trip domestic tickets. That's enough to fly at least 5.4 billion miles - free for the passengers, but at what future cost to the airlines? It is legal for some companies not to record their contingent liabilities. Even it is legal, is it ethical? And under what circumstances is a contingent liability disclosed only in the notes to the financial statements? And under what circumstances is a contingent liability not recorded in the accounts nor disclosed in the notes to the financial statements?
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