Question $10$ of $11$

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In preparing Bramble Corporation's December $31,2023$ financial statements under ASPE, the vice$-$president, finance, is trying to determine the proper accounting treatment for each of the following situations.

As a result of uninsured accidents during the year, personal injury suits for $$325,000$ and $$60,000$ have been filed against Bramble. It is the judgement of Bramble's lawyers that an unfavourable outcome is unlikely in the $$60,000$ case but that an unfavourable verdict for approximately $$240,000$ is likely in the $$325,000$ case.

In early $2023,$ Bramble received notice from the provincial environment ministry that a site Bramble had been using to dispose of waste was considered toxic, and that Bramble would be held responsible for its cleanup under provincial legislation. The vice$-$president, finance, discussed the situation over coffee with the vice$-$president, engineering. The engineer stated that it would take up to three years to determine the best way to remediate the site and that the cost would be considerable, perhaps as much as $$520,000$ to $$2\mathrm{.}08$ million or more. The engineering vice$-$president advocates recognizing at least the minimum estimate of $$520,000$ in the current year's financial statements. The financial vice$-$president advocates just disclosing the situation, and the inability to estimate the cost, in a note to the financial statements.