Grinchy McGrinch has a pending lawsuit that has a possible chance (about 50% likelihood) of being settled in favor of the plaintiff who is a former employee. How would this pending lawsuit affect Grinchys financial statements? The pending lawsuit would __________________________: Group of answer choices

Be presented as an expense on the income statement and contingent liability on the balance sheet. Be presented as a contingent liability on the balance sheet and be reported formally to the SEC. Have no impact on the financial statements. Be presented as a disclosure in a financial statement footnote.