CPA-DRS-FAR

efficientlearning.com/cpa FAR Document Review Simulation Specific Transactions, Events and Disclosures › Commitments, Contingencies and Guarantees Footnote Question 3-5 Question 6-8 Question 9-10 Question 11-13 Question 14-17 Exhibit: Memo on repair defective switches 18 Exhibit: Legal letter on personal losses 19 Exhibit: Letter from the EPA 20 Exhibit: Guarantee of Subsidiary Bank Note 21 Exhibit: Guarantee of Subsidiary Bank Note Part 22 Exhibit: Article 23 Exhibit: Assessment of Liability 24 Document Review: Contingency Footnote Scroll down to complete all parts of this task Below is a completed footnote disclosure for Spark Company’s contingencies and guarantees You were asked to review the footnote disclosure and supporting documentation to determine the accuracy and completeness of the disclosure based on the supporting documents Note 11: Contingencies and Guarantees In the year ended December 31, 20X5 we recorded charges related to the following contingencies and guarantees In 20X5 we began the recall to repair switches that could catch fire under certain circumstances such as a surge of electrical power Management estimated and accrued $1.8 million related to the replacement of the defective switches In addition, some consumers and / or their property were harmed as a result of the defective switches As a result of the punitive damages that could result from injuries and property damage to the consumers, $3 million was accrued During 20X5 the Environmental Protection Agency (EPA) began an investigation on the contamination of the soil near one of our plant sites The EPA has named four entities, including the Company, as a potentially responsible party related to the clean-up of the plant site Approximately $1.22 million related to the investigation was accrued on the December 31, 20X5 financial statements We provide a payment guarantee for our wholly owned subsidiary, Steam Corporation, on a commercial loan outstanding with a financial institution The loan is adequately secured with assets of the subsidiary, and management believes there is a remote chance of default by Steam Corporation The total amount of the guarantee is $2.5 million Management has taken a conservative position and accrued a liability of $2.5 million associated with the potential payments on behalf of the subsidiary The Company recently experienced an explosion at its Wheaton Illinois plant The explosion resulted in death and injury of several employees As of December 31, 20X5, no claims or litigation has been asserted Management believes that the ultimate liability for the company related to the incident will be less than $25 million Document Review: Contingency Footnote : Question Note 11: Contingencies and Guarantees In the year ended December 31, 20X5 we recorded charges related the following contingencies and guarantees In 20X5 we began the recall to repair switches that could catch fire under certain circumstances such as a surge of electrical power Management estimated and accrued $1.8 million related to the replacement of the defective switches Question 1: Choose an option below:  [Original text] Management estimated and accrued $1.8 million related to the replacement of the defective switches  [Delete text]  Management estimated and accrued $1.5 million related to the replacement of the defective switches but the actual liability is estimated to be $1.5 to 1.8 million  Management estimated and accrued $1.65 million related to the replacement of the defective switches Management estimated but did not accrue a liability associated with the replacement of the defective switches  Management estimated the cost for the replacement of the defective switches to be between $1.5 million and $1.8 million and did not accrue a liability  Management believes the replacement of the defective switches is unlikely and did not accrue a liability In addition, some consumers and / or their property were harmed as a result of the defective switches As a result of the punitive damages that could result from injuries and property damage to the consumers, $3 million was accrued During 20X5 the Environmental Protection Agency (EPA) began an investigation on the contamination of the soil near one of our plant sites The EPA has named four entities, including the Company, as a potentially responsible party related to the clean-up of the plant site Approximately $1.22 million related to the investigation was accrued on the December 31, 20X5 financial statements We provide a payment guarantee for our wholly owned subsidiary, Steam Corporation, on a commercial loan outstanding with a financial institution The loan is adequately secured with assets of the subsidiary, and management believes there is a remote chance of default by Steam Corporation The total amount of the guarantee is $2.5 million Management has taken a conservative position and accrued a liability of $2.5 million associated with the potential payments on behalf of the subsidiary The Company recently experienced an explosion at its Wheaton Illinois plant The explosion resulted in death and injury of several employees As of December 31, 20X5, no claims or litigation has been asserted Management believes that the ultimate liability for the company related to the incident will be less than $25 million Document Review: Contingency Footnote: Question & Rationale: Note 11: Contingencies and Guarantees In the year ended December 31, 20X5 we recorded charges related the following contingencies and guarantees In 20X5 we began the recall to repair switches that could catch fire under certain circumstances such as a surge of electrical power Management estimated and accrued $1.8 million related to the replacement of the defective switches Question 1:  [Original text] Management estimated and accrued $1.8 million related to the replacement of the defective switches  [Delete Text]  Management estimated and accrued $1.5 million related to the replacement of the defective switches but the actual liability is estimated to be $1.5 to 1.8 million  Management estimated and accrued $1.65 million related to the replacement of the defective switches  Management estimated but did not accrue a liability associated with the replacement of the defective switches  Management estimated the cost for the replacement of the defective switches to be between $1.5 million and $1.8 million and did not accrue a liability  Management believes the replacement of the defective switches is unlikely and did not accrue a liability Rationale 1: Management estimated and accrued $1.5 million related to the replacement of the defective switches but the actual liability is estimated to be $1.5 to $1.8 million Since it is probable that range of loss will be from $1.5 to $1.8 million, management should accrue the lower end of the range and disclose the upper end of the estimate In addition, some consumers and / or their property were harmed as a result of the defective switches As a result of the punitive damages that could result from injuries and property damage to the consumers, $3 million was accrued During 20X5 the Environmental Protection Agency (EPA) began an investigation on the contamination of the soil near one of our plant sites The EPA has named four entities, including the Company, as a potentially responsible party related to the clean-up of the plant site Approximately $1.22 million related to the investigation was accrued on the December 31, 20X5 financial statements We provide a payment guarantee for our wholly owned subsidiary, Steam Corporation, on a commercial loan outstanding with a financial institution The loan is adequately secured with assets of the subsidiary, and management believes there is a remote chance of default by Steam Corporation The total amount of the guarantee is $2.5 million Management has taken a conservative position and accrued a liability of $2.5 million associated with the potential payments on behalf of the subsidiary The Company recently experienced an explosion at its Wheaton Illinois plant The explosion resulted in death and injury of several employees As of December 31, 20X5, no claims or litigation has been asserted Management believes that the ultimate liability for the company related to the incident will be less than $25 million Document Review: Contingency Footnote: Question Note 11: Contingencies and Guarantees In the year ended December 31, 20X5 we recorded charges related the following contingencies and guarantees In 20X5 we began the recall to repair switches that could catch fire under certain circumstances such as a surge of electrical power Management estimated and accrued $1.8 million related to the replacement of the defective switches In addition, some consumers and / or their property were harmed as a result of the defective switches As a result of the punitive damages that could result from injuries and property damage to the consumers, $3 million was accrued Question 2: Choose an option below:  [Original text] As a result of the punitive damages that could result from injuries and property damage to the consumers $3 million was accrued  [Delete text]  As a result of the punitive damages that could result from injuries and property damage to the consumers $2 million was accrued  As a result of the punitive damages that could result from injuries and property damage to the consumers $1 million was accrued  The punitive damages that could result from injuries and property damage to the consumers have not been accrued, but we estimate potential damages to be between $2 and $3 million  The punitive damages that could result from injuries and property damage to the consumers have not been accrued During 20X5 the Environmental Protection Agency (EPA) began an investigation on the contamination of the soil near one of our plant sites The EPA has named four entities, including the Company, as a potentially responsible party related to the clean-up of the plant site Approximately $1.22 million related to the investigation was accrued on the December 31, 20X5 financial statements We provide a payment guarantee for our wholly owned subsidiary, Steam Corporation, on a commercial loan outstanding with a financial institution The loan is adequately secured with assets of the subsidiary, and management believes there is a remote chance of default by Steam Corporation The total amount of the guarantee is $2.5 million Management has taken a conservative position and accrued a liability of $2.5 million associated with the potential payments on behalf of the subsidiary The Company recently experienced an explosion at its Wheaton Illinois plant The explosion resulted in death and injury of several employees As of December 31, 20X5, no claims or litigation has been asserted Management believes that the ultimate liability for the company related to the incident will be less than $25 million Document Review: Contingency Footnote: Question & Rationale Note 11: Contingencies and Guarantees In the year ended December 31, 20X5 we recorded charges related the following contingencies and guarantees In 20X5 we began the recall to repair switches that could catch fire under certain circumstances such as a surge of electrical power Management estimated and accrued $1.8 million related to the replacement of the defective switches In addition, some consumers and / or their property were harmed as a result of the defective switches As a result of the punitive damages that could result from injuries and property damage to the consumers, $3 million was accrued Question 2:  [Original text] As a result of the punitive damages that could result from injuries and property damage to the consumers $3 million was accrued  [Delete text]  As a result of the punitive damages that could result from injuries and property damage to the consumers $2 million was accrued  As a result of the punitive damages that could result from injuries and property damage to the consumers $1 million was accrued  The punitive damages that could result from injuries and property damage to the consumers have not been accrued, but we estimate potential damages to be between $2 and $3 million  The punitive damages that could result from injuries and property damage to the consumers have not been accrued Rationale The punitive damages that could result from injuries and property damage to the consumers have not been accrued, but we estimate potential damages to be between $2 and $3 million Since the punitive damages are only possible and not probable, no loss should be accrued but the range of potential loss should be disclosed During 20X5 the Environmental Protection Agency (EPA) began an investigation on the contamination of the soil near one of our plant sites The EPA has named four entities, including the Company, as a potentially responsible party related to the clean-up of the plant site ttApproximately $1.22 million related to the investigation was accrued on the December 31, 20X5 financial statements We provide a payment guarantee for our wholly owned subsidiary, Steam Corporation, on a commercial loan outstanding with a financial institution The loan is adequately secured with assets of the subsidiary, and management believes there is a remote chance of default by Steam Corporation The total amount of the guarantee is $2.5 million Management has taken a conservative position and accrued a liability of $2.5 million Document Review: Contingency Footnote: Question & Rationale associated with the potential payments on behalf of the subsidiary The Company recently experienced an explosion at its Wheaton Illinois plant The explosion resulted in death and injury of several employees As of December 31, 20X5, no claims or litigation has been asserted Management believes that the ultimate liability for the company related to the incident will be less than $25 million Document Review: Contingency Footnote: Question Note 11: Contingencies and Guarantees In the year ended December 31, 20X5 we recorded charges related the following contingencies and guarantees In 20X5 we began the recall to repair switches that could catch fire under certain circumstances such as a surge of electrical power Management estimated and accrued $1.8 million related to the replacement of the defective switches In addition, some consumers and / or their property were harmed as a result of the defective switches As a result of the punitive damages that could result from injuries and property damage to the consumers, $3 million was accrued During 20X5 the Environmental Protection Agency (EPA) began an investigation on the contamination of the soil near one of our plant sites The EPA has named four entities, including the Company, as a potentially responsible party related to the clean-up of the plant site Approximately $1.22 million related to the investigation was accrued on the December 31, 20X5 financial statements Question 3: Choose an option below:  [Original text] Approximately $1.22 million related to the investigation was accrued on the December 31, 20X5 financial statements  [Delete text]  Approximately $305,000 related to the investigation was accrued on the December 31, 20X5 financial statements  No amounts have been accrued associated with the investigation because of the uncertainty regarding whether the company will be found to be a responsible party  The potential cost of the remediation, $1.22 million, was not accrued  The potential cost of the remediation, $305,000, was not accrued We provide a payment guarantee for our wholly owned subsidiary, Steam Corporation, on a commercial loan outstanding with a financial institution The loan is adequately secured with assets of the subsidiary, and management believes there is a remote chance of default by Steam Corporation The total amount of the guarantee is $2.5 million Management has taken a conservative position and accrued a liability of $2.5 million associated with the potential payments on behalf of the subsidiary The Company recently experienced an explosion at its Wheaton Illinois plant The explosion resulted in death and injury of several employees As of December 31, 20X5, no claims or litigation has been asserted Management believes that the ultimate liability for the company related to the incident will be less than $25 million Document Review: Contingency Footnote : Question & Rationale Note 11: Contingencies and Guarantees In the year ended December 31, 20X5 we recorded charges related the following contingencies and guarantees In 20X5 we began the recall to repair switches that could catch fire under certain circumstances such as a surge of electrical power Management estimated and accrued $1.8 million related to the replacement of the defective switches In addition, some consumers and / or their property were harmed as a result of the defective switches As a result of the punitive damages that could result from injuries and property damage to the consumers, $3 million was accrued During 20X5 the Environmental Protection Agency (EPA) began an investigation on the contamination of the soil near one of our plant sites The EPA has named four entities, including the Company, as a potentially responsible party related to the clean-up of the plant site Approximately $1.22 million related to the investigation was accrued on the December 31, 20X5 financial statements Question & Rationale: Choose an option below:  [Original text] Approximately $1.22 million related to the investigation was accrued on the December 31, 20X5 financial statements  [Delete text]  Approximately $305,000 related to the investigation was accrued on the December 31, 20X5 financial statements  No amounts have been accrued associated with the investigation because of the uncertainty regarding whether the company will be found to be a responsible party  The potential cost of the remediation, $1.22 million, was not accrued  The potential cost of the remediation, $305,000, was not accrued Rationale No amounts have been accrued associated with the investigation because of the uncertainty regarding whether the company will be found to be a responsible party Because of the uncertainty about the responsible party, no amount should be accrued or disclosed related to the investigation We provide a payment guarantee for our wholly owned subsidiary, Steam Corporation, on a commercial loan outstanding with a financial institution The loan is adequately secured with assets of the subsidiary, and management believes there is a remote chance of default by Steam Corporation The total amount of the guarantee 10 is $2.5 million Management has taken a conservative position and accrued a liability of $2.5 million associated with the potential payments on behalf of the subsidiary The Company recently experienced an explosion at its Wheaton Illinois plant The explosion resulted in death and injury of several employees As of December 31, 20X5, no claims or litigation has been asserted Management believes that the ultimate liability for the company related to the incident will be less than $25 million 11 Document Review: Contingency Footnote: Question Note 11: Contingencies and Guarantees In the year ended December 31, 20X5 we recorded charges related the following contingencies and guarantees In 20X5 we began the recall to repair switches that could catch fire under certain circumstances such as a surge of electrical power Management estimated and accrued $1.8 million related to the replacement of the defective switches In addition, some consumers and / or their property were harmed as a result of the defective switches As a result of the punitive damages that could result from injuries and property damage to the consumers, $3 million was accrued During 20X5 the Environmental Protection Agency (EPA) began an investigation on the contamination of the soil near one of our plant sites The EPA has named four entities, including the Company, as a potentially responsible party related to the clean-up of the plant site Approximately $1.22 million related to the investigation was accrued on the December 31, 20X5 financial statements We provide a payment guarantee for our wholly owned subsidiary, Steam Corporation, on a commercial loan outstanding with a financial institution The loan is adequately secured with assets of the subsidiary, and management believes there is a remote chance of default by Steam Corporation The total amount of the guarantee is $2.5 million Management has taken a conservative position and accrued a liability of $2.5 million associated with the potential payments on behalf of the subsidiary Question 4: Choose an option below:  [Original text] Management takes a conservative position and accrued a liability of $2.5 million associated with the potential payments on behalf of the subsidiary  [Delete Text]  Management accrued a liability of $1 million associated with the potential payments on behalf of the subsidiary  Management accrued a liability of $1.25 million, which is one-half of the potential liability  Management has absolutely no potential liability related to this guarantee The Company recently experienced an explosion at its Wheaton Illinois plant The explosion resulted in death and injury of several employees As of December 31, 20X5, no claims or litigation has been asserted Management believes that the ultimate liability for the company related to the incident will be less than $25 million 12 Document Review: Contingency Footnote: Question & Rationale Note 11: Contingencies and Guarantees In the year ended December 31, 20X5 we recorded charges related the following contingencies and guarantees In 20X5 we began the recall to repair switches that could catch fire under certain circumstances such as a surge of electrical power Management estimated and accrued $1.8 million related to the replacement of the defective switches In addition, some consumers and / or their property were harmed as a result of the defective switches As a result of the punitive damages that could result from injuries and property damage to the consumers, $3 million was accrued During 20X5 the Environmental Protection Agency (EPA) began an investigation on the contamination of the soil near one of our plant sites The EPA has named four entities, including the Company, as a potentially responsible party related to the clean-up of the plant site Approximately $1.22 million related to the investigation was accrued on the December 31, 20X5 financial statements We provide a payment guarantee for our wholly owned subsidiary, Steam Corporation, on a commercial loan outstanding with a financial institution The loan is adequately secured with assets of the subsidiary, and management believes there is a remote chance of default by Steam Corporation The total amount of the guarantee is $2.5 million Management has taken a conservative position and accrued a liability of $2.5 million associated with the potential payments on behalf of the subsidiary Question & Rationale: Choose an option below:  [Original text] Management takes a conservative position and accrued a liability of $2.5 million associated with the potential payments on behalf of the subsidiary  [Delete Text]  Management accrued a liability of $1 million associated with the potential payments on behalf of the subsidiary  Management accrued a liability of $1.25 million, which is one-half of the potential liability  Management has absolutely no potential liability related to this guarantee Rationale Delete text The text should be deleted because no accrual of liability is necessary There is no probable loss The amount of the guarantee adequately discloses the potential liability 13 The Company recently experienced an explosion at its Wheaton Illinois plant The explosion resulted in death and injury of several employees As of December 31, 20X5, no claims or litigation has been asserted Management believes that the ultimate liability for the company related to the incident will be less than $25 million 14 Document Review: Contingency Footnote: Question Note 11: Contingencies and Guarantees In the year ended December 31, 20X5 we recorded charges related the following contingencies and guarantees In 20X5 we began the recall to repair switches that could catch fire under certain circumstances such as a surge of electrical power Management estimated and accrued $1.8 million related to the replacement of the defective switches In addition, some consumers and / or their property were harmed as a result of the defective switches As a result of the punitive damages that could result from injuries and property damage to the consumers, $3 million was accrued During 20X5 the Environmental Protection Agency (EPA) began an investigation on the contamination of the soil near one of our plant sites The EPA has named four entities, including the Company, as a potentially responsible party related to the clean-up of the plant site Approximately $1.22 million related to the investigation was accrued on the December 31, 20X5 financial statements We provide a payment guarantee for our wholly owned subsidiary, Steam Corporation, on a commercial loan outstanding with a financial institution The loan is adequately secured with assets of the subsidiary, and management believes there is a remote chance of default by Steam Corporation The total amount of the guarantee is $2.5 million Management has taken a conservative position and accrued a liability of $2.5 million associated with the potential payments on behalf of the subsidiary The Company recently experienced an explosion at its Wheaton Illinois plant The explosion resulted in death and injury of several employees As of December 31, 20X5, no claims or litigation has been asserted Management believes that the ultimate liability for the company related to the incident will be less than $25 million Question 5: Choose an option below:  [Original text] Management believes that the ultimate liability for the company related to the incident will be less than $25 million  [Delete Text]  Management has accrued $5 million related to the incident  Management believes that it is unlikely that liability from the incident will exceed the amount of insurance coverage  Management has accrued $30 million related to the liability 15 Document Review: Contingency Footnote: Question & Rationale Note 11: Contingencies and Guarantees In the year ended December 31, 20X5 we recorded charges related the following contingencies and guarantees In 20X5 we began the recall to repair switches that could catch fire under certain circumstances such as a surge of electrical power Management estimated and accrued $1.8 million related to the replacement of the defective switches In addition, some consumers and / or their property were harmed as a result of the defective switches As a result of the punitive damages that could result from injuries and property damage to the consumers, $3 million was accrued During 20X5 the Environmental Protection Agency (EPA) began an investigation on the contamination of the soil near one of our plant sites The EPA has named four entities, including the Company, as a potentially responsible party related to the clean-up of the plant site Approximately $1.22 million related to the investigation was accrued on the December 31, 20X5 financial statements We provide a payment guarantee for our wholly owned subsidiary, Steam Corporation, on a commercial loan outstanding with a financial institution The loan is adequately secured with assets of the subsidiary, and management believes there is a remote chance of default by Steam Corporation The total amount of the guarantee is $2.5 million Management has taken a conservative position and accrued a liability of $2.5 million associated with the potential payments on behalf of the subsidiary The Company recently experienced an explosion at its Wheaton Illinois plant The explosion resulted in death and injury of several employees As of December 31, 20X5, no claims or litigation has been asserted Management believes that the ultimate liability for the company related to the incident will be less than $25 million Question & Rationale: Choose an option below:  [Original text] Management believes that the ultimate liability for the company related to the incident will be less than $25 million  [Delete Text]  Management has accrued $5 million related to the incident  Management believes that it is unlikely that liability from the incident will exceed the amount of insurance coverage  Management has accrued $30 million related to the liability 16 Rationale #5 Rationale Management believes that it is unlikely that liability from the incident will exceed the amount of insurance coverManagement believes that it is unlikely that liability from the incident will exceed the amount of insurance age Since management believes there is a remote chance that the company’s liability will exceed its insurance coverage Since management believes there is a remote chance that the company’s liability will exceed its coverage, there is no need to accrue a liability insurance coverage, there is no need to accrue a liability 17 Exhbit: Memo Memo on repair defective switches To:    Spark  Company,  Chief  Financial  Office   From:    Spark  Company,  Corporate  Reporting   Date:    February  1,  20X5   RE:    Liability  associated  with  the  repair  of  defective  switches     Base  on  the  opinion  of  legal  counsel,  Spark  Company  is  liable  for  the  recall   switches   made   from   20X2   –   20X4   for   potential   defects     This   liability   is   probable   to   occur   and   estimated   to   cost   Spark   between   $1.5   and   $1.8   million    Our  calculation  is  based  on  the  number  of  switches  sold  during  this   time  period,  the  estimated  cost  of  new  switches  and  the  estimated  cost  for   shipping  and  handling     18 Exhbit: Legal Letter Legal letter on personal losses Alfonso & Watson Attorneys at Law   April 1, 20X5 CEO, Spark Company We have reviewed the case associated with the lawsuits related to the personal damages from the defective switches While we not believe there is a probable loss from these claims, it is possible there could be punitive damages of $2,000,000 to $3,000,000 awarded   19 Exhbit: Letter Letter from the Environmental Protection Agency Environmental Protection Agency 1200 Pennsylvania Ave Washington, DC 20460 August 1, 20X5   Abner Corp., Grand Inc., Spark Company, and Vulcon Inc., have been named as a potentially responsible parties (PRP) associated with the soil remediation located at lot# 3A4356F in Cambridge, OH Remediation of this soil includes, but is not limited to removal of the underground gas tanks, removal of tons of contaminated soil, and establishment of proper drainage A total estimate for this remediation is $1.22 million Once the responsible party is determined, this remediation needs to be completed one year from the date of notice 20 Exhbit: Bank Note Guarantee of Subsidiary Bank Note CORPORATE GUARANTEE THIS GUARANTEE dated this 15 day of June, 20X5 From: Spark  Company  of  1211  Tabor  Rd.,  Northbrook,  IL  60062 (the  "Guarantor") To: First  National  Bank  of  3400  Main  St.,  Chicago,  IL  60609 (the  "Lender") Re: Stream  Corp (the  "Debtor") IN CONSIDERATION OF the Lender extending future credit from time to time to the Debtor, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Guarantor, guarantees the prompt, full and complete performance of any and all present and future duties, obligations and indebtedness (the "Debt") due to the Lender by the Debtor, up to a limit of $2,500,000, under the terms of certain debt agreements (the "Agreement") and under the following terms and conditions: Subject to the above limit, the Guarantor guarantees that the Debtor will promptly pay the full amount of principal and interest of the Debt as and when the same will in any manner be or become due, either according to the terms and conditions provided by the Agreement or upon acceleration of the payment under the Agreement by reason of a default The Lender may grant extensions of time or other indulgences and otherwise deal with the Debtor and with other parties and securities as the Lender may see fit without in any way limiting or lessening the liability of the Guarantor under this Agreement Any impairment of the security, which the Lender may from time to time hold as security for the Debt, will in no way operate to discharge the Guarantor in whole or in part, it being specifically agreed that the Lender is not required to exercise diligence to enforce its rights against the Debtor The liability of the Guarantor will continue until payment is made of every obligation of the Debtor now or later incurred in connection with the Debt and until payment is made of any loss or damage incurred by the Lender with respect to any matter covered by this Guarantee or any of the Agreement 21 Exhbit: Bank Note The Guarantor represents that at the time of the execution and delivery of this Guarantee nothing exists to impair the effectiveness of this Guarantee The Lender may, at its option, proceed in the first instance against the Guarantor to collect the obligations covered by this Guarantee without first proceeding against any other person, firm or corporation and without resorting to any property held by the Lender as collateral security This Guarantee is made pursuant to the laws of the State of Illinois In the event that this Guarantee must be enforced by the Lender, all reasonable costs and expenses, including attorney's fees, incurred by the Lender will be paid by the Guarantor IN WITNESS WHERE OF the Guarantor has duly affixed its signature under hand and seal on this 15 day of June, 20X%   Hiram  Jones Spark  Company     Notary  Public  for  the  State  of  Illinois Per:  Terry Yates In  the  County  of  Cook My  commission  expires  December  31,  20X9     22 Exhbit: Article Article about plant explosion Daily News   AP  Newswire:    On  December  1,  20X5  Spark  Company  had  an  explosion  in   its  Wheaton  Illinois  plant    Three  employees  died  in  the  explosion  and   another  six  employees  were  injured    The  explosion  is  under  investigation   by  local  authorities         23 Exhbit: Assessment Assessment of liability related to plant explosion To:    Spark  Company,  Chief  Financial  Office   From:    Spark  Company,  Corporate  Reporting   Date:    December  22,    20X5     RE:    Liability  associated  plant  explosion     The  explosion  at  the  Wheaton  plant  may  result  in  a  liability  for  the  corporation    As  of  yet   no  individuals  have  filed  suit  in  the  matter  and  the  company   has   a   $25   million   in   liability   coverage       Base  on  the  opinion  of  legal  counsel,  it  is  very  likely  that  the  liability  will  not  exceed  the   extent   of   the   company’s   coverage     However,   there   is   a   remote   probability   that   the   ultimate  liability  could  exceed  our  insurance  coverage  by  $5  million   24