On Dec. 31, year 3 Mild company was a defendant in a pending lawsuit. The suit arose from the alleged defect of a product that Mild sold in year 2. In the opinion of Mild's attorney, it is probable that Mild will have to pay 700,000 as a result, and it is reasonably possible that Mild will have to pay 800,000 as a result of this lawsuit. In Mild's year 3 financial statements, what is the entry to report on this and any other requisites?