As of 12/31/19, Menelaus Company is being sued by a customer who fell down in a store on March 1st of the same year. It is determined that a loss from the lawsuit is reasonably possible, and the company is able to reasonably estimate the amount. How should the company account for this lawsuit in its 10-K for 2019?

Disclose it in the footnotes to the financial statements

Because the lawsuit is only "reasonable possible", it does not need to be recorded or disclosed anywhere

Record it as a contingent liability on the balance sheet

The answer cannot be determined until the outcome of the lawsuit is known