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Martinson Cycles, Inc., a motorcycle manufacturer, included the following note in its annual report 10/4) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7 (In Part): Commitments and

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Martinson Cycles, Inc., a motorcycle manufacturer, included the following note in its annual report 10/4) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7 (In Part): Commitments and Contingencies The Company self sures its product liability essent in the United States up to $3.8 milion (Catastrophic coverage is maintained for individual claims in excess of $3.8 million up to $26.3 million), Outside the United States, the Company issued for product liability up to $20.3 million per individual claim and in the aggregate Read the requirements 1. Why are these contingent (versus roa) liabilities? liable for any of these product losses These are contingent liabilities because at the time of the note Martinson Cycles, Inc Einsures its product liability losses in the United States up to $3.8 million (catastrophic coverage is maintained for individua 26.3 million). Outside the United States, the Company is insured for product liability up to $26. 3 million per individual clair gent (versus Requirements bilities becau les 1. Why are these contingent (versus real) liabilities? 2. In the United States, how can the contingent liability become a real liability for Martinson? What are the limits to the company's product liabilities in the United States? 3. How can a contingency outside the United States become a real liability for the company? How does Martinson's potential liability differ for claims outside the United States? Print Done ses in the United States up to $3.8 million (catastrophic coverage is maintained for ir ed States, the Company is insured for product liability up to $26.3 million per individt of the note Martinson Cycles, Inc. liable for any of these product losses was was not

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