medium · Financial Accounting liabilities-bonds-payable
A firm has a probability-weighted expected cost for a product recall of $1,200,000. However, the 'most likely' single outcome is a cost of $900,000.
Under U.S. GAAP, if all outcomes in a range are equally likely, but $900,000 is slightly more probable, which amount should be accrued?
- The low end of the total possible range.
- $1,050,000
- $900,000
- $1,200,000
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