ABC Company is aware of a potential product liability issue. To date no one has filed a claim for damages with ABC. ABC management concludes that a contingent liability is probable but no reasonable estimate of the liability can be made. What is the appropriate treatment of this contingent liability?

Group of answer choices

Record the liability in a journal entry.

Disclose in footnotes to the financial statements but record no journal entry.

Neither record a liability nor disclose in the footnotes.

Disclose only in the notes to the firm's federal income tax return.