$2.$ An agency's general counsel has concluded it is probable that the agency will be found responsible for some wetlands damage that occurred during the restoration of a historic site. It is unclear what costs will result from the judgment at this time. The agency should:

A$.$ Disclose the situation in the body of its financial statements

B$.$ Disclose the situation in a footnote C$.$ Disclose both in the body of the statement and in a footnote

$3.$ An agency$$s attorney disclosed that the agency is facing a possible loss from pending litigation amounting to $$10,000,000.$ Consequently, the agency:

A$.$ Will record the amount as a contingent liability in the body of its financial statements

B$.$ Will disclose this contingent liability in its notes to its financial statements

C$.$ Is not required to record a liability nor disclose it in its notes