During 2021, Allensprings Inc. was sued by a customer. As of December 31st, 2021 (the end of Allensprings fiscal year the towsult was sent pending in court . Allensprings consulted with their attorneys and determined it was reasonably possible that they would lose the low suit and estimated that if they lost the lawsuit the damages would be $40,000. In their 2021 financial statements, Allensprings should Multiple Choice Recognire a contingent liability, but not recognize a loss Not disclose the litigation because it is still pending Recognize a loss and a contingent lobility of $40,000 Disclose the lawsuit in the notes accompanying their financing statements