Please post the accounting standards used in answering these questions.

Part 3. Contingent Liabilities Facts: A company is sued prior to the financial statement date (i.e. year-end). Before the financial statements are issued, the suit is settled for $825,000, a material loss to the company. Before year-end, a company is assessed $250,000 in additional taxes as a result of an IRS audit. The company's tax attorney believes that a settlement with the IRS can be reached for $120,000. Settlement has not been reached before the financial statements are issued. Required: For both cases discussed above, answer two questions: 1. Should the company record a loss reserve at year end, and if so, for how much? 2. Should the company disclose this matter in the footnotes to the company's financial statements at year end