In July of 2022, Lake Company became involved in a penalty dispute with the EEOC. At December 31, 2022, the employment attorney for Lake indicated that an unfavorable outcome to the dispute was probable. The additional penalties were estimated to be $765,000 but could be as high as $1,160,000. After the year-end, but before the 2022 financial statements were issued, Lake accepted an EEOC settlement offer of $890,000. How much accrued liability should Lake report in its December 31,2022 balance sheet?

$765,000.

$890,000.

$1,160,000.

$270,000.