Harley-Davidson, Inc., the motorcycle manufacturer, used to include the following note (adapted) in.

Harley-Davidson, Inc., the motorcycle manufacturer, used to include the following note (adapted) in its annual report: Notes to Consolidated Financial Statements 7 (in Part): Commitments and Contingencies (Adapted) The Company self-insures its product liability losses in the United States up to $3 million. Catastrophic coverage is maintained for individual claims in excess of $3 million up to $25 million. 1. Why are these contingent (versus real) liabilities? 2. How can a contingent liability become a real liability for Harley- Davidson? What are the limits to the company s product liabilities in the United States?

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