Exercise 9-14 Accounting for contingent liabilities LO C3 For each separate situation, indicate whether Cruz Company should (a) record a liability, (b) disclose in notes, or (C) have no disclosure. 1. Cruz Company guarantees the $100,000 debt of a supplier. It is not probable that the supplier will default on the debt. A disgruntled employee is suing Cruz Company. Legal advisers believe that the company will likely need to pay damages, but the amount cannot be reasonably estimated