In early 2006, Merck AG, a global pharmaceutical company, saw its share price decline dramatically after a jury in the United States found the company guilty of failing to warn consumers about safety issues surrounding one of the company’s products, a painkilling drug called Vioxx. Although Merck was found not guilty in one case involving a plaintiff who died while taking the drug, the company was found guilty in a second case, with the court awarding the survivors of the deceased plaintiff \($4.5\) million in compensatory damages. At the time of the trial, over 5,000 separate Vioxx-related lawsuits had been filed against Merck. Discuss how Merck should disclose the \($4.5\) million lawsuit award in its 2006 annual report. How should Merck disclose the 5,000 pending lawsuits in its 2005 financial statements before the court case was decided against the company? How should Merck report the pending Vioxx-related lawsuits in its 2006 annual report?