Pitchfork Company is being sued in a class action lawsuit alleging local residents have become ill due to toxic chemical exposure from its plant. Pitchforks lawyers state that it is probable Pitchfork will lose the suit and be found liable for a judgment costing anywhere from $1,800,000 to $9,000,000. However, the lawyers state that the most probable cost is $5,400,000.

As a result of the above information, Pitchforks should report:

Group of answer choices

a contingent liability in the amount of $5,400,000 on its Balance Sheet and disclose an additional contingency of up to $3,600,000 in the notes to the Balance Sheet.

a contingent liability in the amount of $1,800,000 on its Balance Sheet and disclose an additional contingency of up to $7,200,000 in the notes to the Balance Sheet.

a contingent liability in the amount of $5,400,000 on its Balance Sheet, but not disclose any additional contingency.

a possible contingency of between $1,800,000 and $9,000,000 only in the notes to the Balance Sheet.