Villeroy Instrument Control is a defendant in lawsuits brought against the marketing and distribution of its products. Damages of \(\$ 7.1\) million are claimed against Villeroy, but the company denies the charges and is vigorously defending itself. In a recent press conference, the president of the company stated that he could not predict the outcome of the lawsuits. Nevertheless, he said management does not believe that any actual liabilities resulting from the lawsuits will significantly affect the company's financial position.

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Prepare a partial balance sheet to show how Villeroy Instrument Control would report this contingent liability in a short presentation. Total actual liabilities are \(\$ 9.7\) million. Also, write the disclosure note to describe the contingency.