Arcand Advisers is being sued by a former customer. Arcand's lawyers say that it is possible, but not probable, that the company will lose the lawsuit and that the trial should last approximately 18 more months. Should Arcand lose, they will most likely have to pay approximately \(\$ 750,000\). How should this lawsuit be reported on the financial statements?

a. Current liability of \(\$ 750,000\) and expense of \(\$ 750,000\)

b. Long-term liability of \(\$ 750,000\) and expense of \(\$ 750,000\)

c. No effect on the statement of financial position or statement of earnings, but disclosed in the notes to the financial statements

d. No disclosure is required