Boston Trombley Company is a defendant in a lawsuit alleging damages of $3 billion. The litigation is anticipated to continue for several years, but no reasonable estimate can be made at this time regarding ultimate financial responsibility. This situation is an example of a(n)

a.loss contingency that should be disclosed in the notes to Boston's financial statements.

b.estimated liability that must appear in Boston Trombley Company's balance sheet.

c.$3 billion expense to be recorded in the income statement during the year of the suit.

d.None of these choices are correct.