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The Park Company is affected by the following contingencies at the end of 2016: 1. Expropriation of Park's foreign assets, valued at $3,000,000, appears reasonably
The Park Company is affected by the following contingencies at the end of 2016:
1. | Expropriation of Park's foreign assets, valued at $3,000,000, appears reasonably possible. |
2. | Parks' legal counsel has concluded that it is probable that the company will be required to pay damages of $500,000 in a lawsuit. |
3. | It appears remotely possible that a major customer will be unable to repay Parks on a note receivable for $100,000. |
4. | Parks' controller estimates that $250,000 of the company's pledged receivables are likely to be uncollectible, and the lender will require Parks to honor the amounts. |
What total amount should Parks accrue for loss contingencies in 2016?
$3,850,000
$3,500,000
$850,000
$750,000
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