Contingent Liabilities

The following note accompanied the financial statements for Goodyear Tire and Rubber Company $($GT$)$:

We have recorded liabilities totaling $$293$ million, including related legal fees expected to be incurred, for potential product liability and other tort claims,

including asbestos claims $....$ General and product liability and other litigation liabilities are recorded based on management's assessment that a loss

arising from these matters is probable $....$ Typically, these lawsuits have been brought against multiple defendants in Federal and state courts.

a$.$ Illustrate the effects on the accounts and financial statements of recording the contingent liability of $$293,000,000.$ If no account or activity is affected, select

$"$No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative

amounts.

Financial Statement Effects

Balance Sheet

Statement of Cash Flows

Income Statement

b$.$ If a contingent liability is

and the amount of the liability can be reasonably estimated, it is

The liability is recorded

and