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Jacobs Company was notified of environmental violations related to its hazardous waste disposal. The likelihood of incurring cleanup costs is probable but Jacobs Company is

Jacobs Company was notified of environmental violations related to its hazardous waste disposal. The likelihood of incurring cleanup costs is probable but Jacobs Company is uncertain of the liability amount. What is Jacobs Company's correct accounting treatment of this contingent liability?

Recognize the liability in the financial statements

Disclose the liability in the footnotes to the financial statements

Neither recognize nor disclose the liability

Either recognize or disclose the liability

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