Cecilia Insurance Company sells home insurance. On January 3, 2014, there is a tornado in Kansas that causes significant damage to the homes of Cecilia's policyholders. On January 15, Cecilia's claims adjusters survey the damaged homes and determine that Cecilia will have to pay total claims of $2 million. Cecilia releases its financial statements for the year ended December 31, 2013, on February 1, 2014. It pays the $2 million in claims on February 9, 2014.

1. In a few sentences, please indicate the dollar amount of liability related to the tornado that Cecilia should record in the financial statements it releases on February 1, 2014.
2. Explain your reasoning.