AA is being sued for $500,000 If its attorney informed AA that it might lose the lawsuit and might have to pay in the range of $350,000 to $400,000, which of the following is the correct treatment of the contingent liability? a) A $400,000 liability should be recorded and a note to the financial statements should disclose that the liability may be only $350,000. b) A $350,000 liability should be recorded and a note to the financial statements should disclose that the liability may be as much as $400,000. c) No entry should be made on the books. The contingent liability should be disclosed in the footnotes d) No entry or footnote disclosure should be made since nothing has been determined for certain.