A lawsuit has been filed against Telmar Corporation alleging violations of federal antitrust laws and claiming damages which, when trebled, total $1.2 billion.

Telmar Corporation denies the charges and intends to contest the suit vigor¬

ously. Legal counsel advises the company that the litigation will last for several years and that a reasonable estimate of the final outcome cannot be made at this time.

Should Telmar Corporation include in its current balance sheet a liability for the damages claimed in this lawsuit? Explain fully.

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