Electronic Innovators is the defendant in a $10 million lawsuit filed by one of its customers, Aviation

Question:

Electronic Innovators is the defendant in a $10 million lawsuit filed by one of its customers, Aviation Systems. The litigation is in final appeal, and legal counsel advises that it is probable that Electronic Innovators will lose the lawsuit. The estimated amount is somewhere between $6 and $10 million. How should Electronic Innovators account for this event?