On October 1, 2015, Surround Co. was identified as a potentially responsible party by the Environmental Protection Agency. Surround management along with its counsel have concluded that it is probable that Surround Co. will be responsible for damages, and a reasonable estimate of these damages is $5,000,000. Surround insurance policy of $9,000,000 has a deductible clause of $500,000. How should Surround Co. report this information in its financial statements at December 31, 2015?