Murals-R-Us Corporation is being sued for $12 million for age discrimination. The company lawyers believe it is reasonably possible the company will have to pay the $12 million on the lawsuit. How would the Murals-R-Us accountants account for this lawsuit?

None pf these

Record the contingent liability in the financial statements for $12 million

Do not disclose the lawsuit

Record the contingent liability as a footnote in the financial statements