On November 5, year 2, a Dunn Corp. truck was in an accident
with an auto driven by Bell. Dunn received notice on January
12, year 3, of a lawsuit for $700,000 damages for personal
injuries suffered by Bell. Dunn Corp.’s counsel believes it is
probable that Bell will be awarded an estimated amount in the
range between $200,000 and $450,000, and that $300,000 is a
better estimate of potential liability than any other amount.
Dunn’s accounting year ends on December 31, and the year 2
financial statements were issued on March 2, year 3. What
amount of loss should Dunn accrue at December 31, year 2?