Mayberry Co has a loss contingency to accrue The loss amount can only be reasonably estimated within a range of outcomes No single amount within the range is a better estimate than any other amount?

Answer 1

In this situation, Mayberry Co should recognize the loss contingency by accruing the minimum amount within the range of estimated outcomes. This approach adheres to accounting principles, which dictate that when a range of losses exists and no specific amount is more likely than another, the lower end of the range should be reflected in the financial statements. This ensures that the financial statements do not overstate liabilities while still providing a conservative estimate of potential losses.