Poison Ivy Company sold underwear made from a fabric that gave many of its customers a serious rash. The customers are suing the company in a class action suit and the company's attorneys thinks it is probable that the case will cost the company $2 million, although the verdict is not yet in. The company should: Multiple Choice not include this information in its annual report. record a liability and a gain for $2 million. O only explain the situation in the notes to the financial statements. record a liability and a loss for $2 million. 3

Poison Ivy Company sold underwear made from a fabric that gave many of its customers a serious rash. The customers are suing the company in a class action suit and the company's attorneys thinks it is probable that the case will cost the company $2 million, although the verdict is not yet in. The company should: Multiple Choice not include this information in its annual report. record a liability and a gain for $2 million. only explain the situation in the notes to the financial statements. record a liability and a loss for $2 million