I. Loss Contingency (worth 30 points) a In May 2017, Challenger Inc. filed a claim against Prime Co. for patent infringement. For the year ended December 31, 2017 Prime's management determined that a loss was probable and estimated the loss was in the range of $15 million to $20 million, with $17 million being the most likely amount of loss within the range. A jury trial took place and reached a verdict in September of 2019 and ordered Prime to pay Challenger $18.5 million. In November 2019, Prime filed a Notice of Appeal with the Court of Appeals. In December 2020, the Courts of Appeals issued a ruling in favor of Prime's appeal and reversed the lower court's ruling, overturning the jury verdict and the $18.5 million judgment against Prime. In January 2021, Challenger filed a petition for a re-hearing before the same panel of appellate judges. In February 2021, the judges declined the petition for a re-hearing. On February 28, 2021, Prime determined this matter was closed upon discussions with in-house legal counsel. a Required: Your response to the following three questions should be about 2 to 3 3 pages, double-spaced. 1. What amount should Prime record as a liability for the year ended December 31, 2017? Please provide the appropriate FASB codification guidance to support your answer. 2. Should Prime adjust its liability for the year ended December 31, 2019? 3. Should Prime record the reduction of the previously recorded loss contingency in 2020 (upon the Court of Appeals overturning the verdict of the jury) or 2021 (once the appellate judges declined Challenger's petition for a re-hearing)