In May of 2021, Durant Inc. became involved in a penalty dispute with the EPA. At December 31, 2021, the environmental attorney for Durant Inc. indicated that an unfavorable outcome to the dispute was probable. The additional penalties were estimated to be $773,000 but could be as high as $1,176,000. After the year-end, but before the 2021 financial statements were issued, Durant Inc. accepted an EPA settlement offer of $906,000. Durant Inc. should have reported an accrued liability on its December 31, 2021, balance sheet of: