Sumsang designs and sells smartphones for personal and commercial use. During the current year, the product engineers notified management of a flaw in the design that could cause the latest model to spontaneously combust. After a further investigation, it was noted that a product recall was probable, with an estimated cost to the company of $2,500,000. What influence might this information have on the current year financial statements?

The company should accrue a liability for the entire $2,500,000

The company should accrue a liability for an amount less than $2,500,000

The company should disclose information about this contingency in the notes to the financial statement

The company does not need to accrue a liability or disclose in the footnotes until the actual payments occur

Both (a) and (c)

Both (b) an (c)

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