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In August 2021, Company B brought legal action against Company A for pollution and are asking for $2.8 million. It is possible that the lawsuit

In August 2021, Company B brought legal action against Company A for pollution and are asking for $2.8 million. It is possible that the lawsuit will be successful for Company B, but the amount Company A will have to pay is not reasonably determinable.

Discuss any financial reporting issues in this example (if any exist) and provide any recommendations on how to handle this situation. What accounting policies are applicable?

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