[28] On January 15, Year 2, before the Mapleview Co. released its financia statements for the year ended December 31, Year 1, it settled a long- standing lawsuit. A material loss resulted and no prior liability had been recorded. How should this loss be disclosed or recognized? A. The loss should be disclosed in notes to the financial statements, but the financial statements themselves need not be adjusted. B. The loss should be disclosed in an explanatory paragraph in the auditor's report. C. No disclosure or recognition is required. D. The financial statements should be adjusted to recognize the loss