1 in march 2007 an explosion occurred at howe co s plant causing damage to area prop 4468537

1. In March 2007, an explosion occurred at Howe Co.’s plant, causing damage to area properties. By May 2007, no claims had yet been asserted against Howe. However, Howe’s management and legal counsel concluded that it was reasonably possible that Howe would be held responsible for negligence, and that $4,000,000 would be a reasonable estimate of the damages. Howe’s $5,000,000 comprehensive public liability policy contains a $400,000 deductible clause. In Howe’s December 31, 2006 financial statements, for which the auditor’s fieldwork was completed in April 2007, how should this casualty be reported?

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