Ace settlted ligation on February $1$ of the current year for event that occured last year. An estimated liability of $$100,000$ was determined as of the end of last year. This estimate was significantly less the final settlement of $$500,000$ and the amount is considered to be material. The financial statements for the previous year have not been issued. How should the settlement be reported in last year's financial statements?

Estimated Liabiity of $$0,$ with no disclosure

Only a disclosure

Estimated Liability of $$100,000,$ with a disclosure

Estimated Liabillity of $$500,000,$ with a disclosure