Question

AgriBiz Inc. provides chemical, plastic, and agricultural products and services to various consumer markets. The following excerpt is taken from the disclosure notes of AgriBiz’s 2017 annual report:

At December 31, 2017, the Company had accrued obligations of $1,331 million for probable environmental remediation and restoration costs, including $239 million for the remediation of Superfund sites. These obligations are included in "Accrued and other current liabilities" and "Other noncurrent obligations" in the consolidated balance sheets. This is management’s best estimate of the costs for remediation and restoration with respect to environmental matters for which the Company has accrued liabilities, although it is reasonably possible that the ultimate cost with respect to these particular matters could range up to approximately two times that amount.

1.Does the excerpt describe a loss contingency? yes
2. Under what conditions would AgriBiz accrue such a contingency?

loss contingency	?
conditions	?

3. What journal entry would AgriBiz use to record this amount of provision (loss)?

Record this amount of provision (loss).

event	general journal	debit	credit
1

Answer 1