The following legal claims exist for a company. Identify the accounting treatment for each claim as either 

(a) A liability that is recorded or 

(b) An item described in notes to its financial statements.
1. The company (defendant) estimates that a pending lawsuit could result in damages of $500,000; it is reasonably possible that the plaintiff will win the case.
2. The company faces a probable loss on a pending lawsuit; the amount is not reasonably estimable.
3. The company estimates environmental damages in a pending case at $900,000 with a high probability of losing the case.