Some car companies currently face numerous lawsuits due to reported cases of failed brakes, which could negatively impact image of those companies. Such lawsuits are prime examples of contingent losses because the loss is contingent upon an adverse settlement or verdict in the case. The litigation loss contingency should be accrued if a loss is probable and can be estimated. Probable and estimable are difficult concepts that offer managers a fair degree of discretion.
In 1-2 paragraphs, describe a circumstance when managers might be willing to accrue a contingent loss that they had earlier resisted accruing.