In 1986, Texaco, Inc. was sued by Pennzoil for tortious interference. Pennzoil had executed a memorandum of understanding with Getty Oil for the purchase by Pennzoil of Getty's proved reserves and producing properties. Texaco made a late offer for the properties that was accepted by Getty. A jury trial was held in Houston in October, 1986. The maximum judgement that could be rendered was about $13 billion, the estimated value of the properties. Texaco attorneys believe that the probability of Texaco losing the case to be remote. In the financial statements of Texaco for the year ended December 31, 1986, the proper disclosure of the pending litigation is : a. Record a liability for $13 billion. b. Disclose in footnote that Texaco has no material probable litigation losses. c. Disclose in footnote that Texaco is party to the litigation with a possible liability of up to $13 billion d. Disclose in footnote that Texaco is party to the litigation but without disclosing an amount

In 1986, Texaco, Inc. was sued by Pennzoil for tortious interference. Pennzoil had executed a memorandum of understanding with Getty Oil for the purchase by Pennzoil of Getty's proved reserves and producing properties. Texaco made a late offer for the properties that was accepted by Getty. A jury trial was held in Houston in October, 1986. The maximum judgement that could be rendered was about $13 billion, the estimated value of the properties. Texaco attomeys believe that the probability of Texaco losing the case to be remote. In the financial statements of Texaco for the year ended December 31,1986, the proper disclosure of the pending litigation is : a. Record a liability for $13 billion. b. Disclose in footnote that Texaco has no material probable litigation losses. c. Disclose in footnote that Texaco is party to the litigation with a possible liability of up to $13 billion d. Disclose in footnote that Texaco is party to the litigation but without disclosing an amount