Several years ago in its annual report, Philip Morris Companies, a major manufacturer of tobacco and food products, included footnote 16, which was almost five pages long. It consisted of a number of separate sec- tions covering such topics as an overview of tobacco-related litigation, the type and number of cases, pend- ing and upcoming trials, verdicts in individual cases, litigation settlements, smoking and health litigation, health care and cost-recovery litigation, and certain other tobacco-related litigation. During the year, over 500 smoking and health-related cases had been filed against the company, an increase of 30 percent over the previous year and 200 percent over the year before that. The company booked a pretax charge of over $3 billion, reducing reported net income to slightly over $5 billion. REQUIRED: Discuss Philip Morris's disclosure and accrual in terms of (1) the methods used to account for loss contingen- cies, and (2) the potential economic consequences associated with the disclosure and accounting treatment