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Chapter 9 Reporting and Analyzing Liabilities Contingencies and Assess ing Liabilities . Analving independent situations represent various types of liabilities. Analyze each situation and JTIO LO1 h of the following is the proper accounting treatment for each company: (1) record in IBC accounts, (2) disclose in a financial statement footnote, or (3) neither record nor disclose Astockholder has filed a lawsuit against Clinch Corporation. Clinch's attorneys have reviewed the facts of the case. Their review revealed that similar lawsuits have never resulted in a cash award and it is highly unlikely that this lawsuit will either. F another company. b. Oster Company signed a 60-day, 10% note when it purchased (and received) items from The Department of Environment Protection notifies Shevlin Company that a state where it has a plant is filing a lawsuit for groundwater pollution against Shevlin and another company that has a plant adjacent to Shevlin's plant. Test results have not identified the exact source of the pollu- tion. Shevlin's manufacturing process often produces by-products that can pollute groundwater manufactured and sold products to a retailer that sold the products to consum he Sloan Company warranty offers replacement of the product if it is found to be defec c. d. Sloan Company tive within 90 days of the sale to the consumer. Historically, 1.2% of the products are returned for replacement. ers. 1 01

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