Discuss the proper accounting treatment for each of the following three independent situations. Give your rationale for the answers.

1. In January, 2023, a worker was injured in the factory in an accident, partially the result of his own negligence. The worker sued the company for $800,000. The attorneys believe it is reasonably possible that the outcome of the suit will be unfavorable and that the settlement would cost the company between $250,000 and $500,000.