On December 20,2020 XYZ Corp. had a chemical spill in a field adjacent to their factory. They completed and paid cash for the immediate clean up prior to their December 31 year end. However, they have consulted with an environmental engineering firm that indicated that there is 90% chance that XYZ will have to perform a further cleanup in six months. The cost of such a cleanup would most likely be $100,000. If the weather is perfect during the cleanup, it could cost as little as $95,000. On the other hand, there is a small chance that soil contamination could spread, increasing the costs to $150,000. Should XYZ recognize a liability in their 2020 financial statements? Assuming they do, what amount should be recognized? How would XYZ record such a liability on their books? What impact would the subsequent cash payment have if the liability were settled for the amount accrued? What if the actual clean-up costs are more or less than was accrued in 2020?