Pacific Cruise Lines is a defendant in litigation involving a swimming accident on one of its three cruise ships. For each of the following scenarios, determine the appropriate way to report the situation. Determine any financial statement effects that may occur.

Required:

1-The likelihood of a payment occurring is probable, and the estimated amount is $1.3 million.

2-The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $1.1 to $1.6 million.

3-The likelihood of a payment occurring is reasonably possible, and the estimated amount is $1.3 million.

4-The likelihood of a payment occurring is remote, while the estimated potential amount is $1.3 million.

How to enter on balance sheet and income statement for each scenario.