2. Complete the following with regard to contingencies: A. What is a contingency? B. When is a contingent liability recorded? C. Darren Company becomes aware of a legal suit filed against them after the date of the financial statements, but before they are issued. An unfavorable outcome is highly probable and the amount can be reasonably estimated. What is the proper accounting treatment of the following scenarios: 1. The events that caused the lawsuit occurred before the balance sheet date. 2. The events that caused the lawsuit occurred after the balance sheet date but before the financial statements are issued. 3. Assume, instead, that Darren Company is the paintiff rather than the defendant in a lawsuit that Darren Company filed a legal claim related to events that occurred prior to year-end. It is highly probably that Darren Company will prevail and receive $1 million from their lawsuit