n the Commitments and Contingencies footnote of a registration filing for the initial public

offering of its common stock, Peloton Interactive, Inc. reported the following information:

Litigation

On March 19, 2019, Downtown Music Publishing LLC... filed a lawsuit against the

Company in the U.S. District Court for the Southern District of New York alleging that the

Company engaged in copyright infringement by using certain accused songs in streaming

and recorded fitness classes without necessary licenses. The plaintiffs allege that they are

music publishers that own or control the copyrights in numerous musical works that were

synchronized by the Company without the plaintiffs' authorization... It seeks injunctive

relief, up to $150 million in damages, and attorneys' fees and costs. The Company intends

to vigorously defend the claim.

While the Company cannot predict what the ultimate result of any judgment against, or

settlement by, the Company, will be in this matter, based on application of ASC 450,

"Contingencies", at June 30, 2019, the Company has accrued its best estimate within a

range of reasonably possible outcomes ranging from $4.0 million to $11.0 million, which is

included in accrued expenses in the accompanying consolidated balance sheets.

Based on this disclosure, what must Peloton Interactive, Inc. believe about its possible losses

due to this lawsuit?

The probability of a loss is remote

The most likely amount is not material.

A loss is probable and the amount is reasonably estimable.

Either a loss is probable but not reasonably estimable, or a loss is reasonably possible

(less than probable but more than remote) and the amount might or might not be

reasonably estimable.