A company is facing a lawsuit from a customer. It is possible, but not probable, that the company will have to pay a settlement that management estimates to be $1,000,000. How would this fact be reported in the financial statements to be issued at the end of the current month?

Multiple Choice

In a descriptive narrative in the footnote section.

$1,000,000 in the Long-term Liability section.

$1,000,000 in the Current Liability section.

None because disclosure is not required.