On January 17, 2021, an explosion occurred at a Cord Company plant, causing extensive property damage to area buildings. Although no claims had yet been asserted against Cord by March 10, 2021, the company believes it is probable that claims will be asserted. Cord's management and counsel concluded that it was reasonably possible that Cord would be responsible for damages and that \(\$ 2,500,000\) would be a reasonable estimate of its liability. Cord's \(\$ 10,000,000\) comprehensive public liability policy has a \(\$ 500,000\) deductible clause.

Required 

In Cord's December 31, 2020, financial statements, which were issued on March 25, 2021, how should this item be reported?