Question 2 12 pts (12 minutes) Acme Corp. is being sued for $20,000,000 due to their continued provision of malfunctioning, dangerous products. One customer in particular grew frustrated with these failings and initiated the lawsuit. Acme Corp.'s sales are about $50 million per year. On December 31st, 2020, their lawyer states: It's likely that we will win this case, and the lawsuit will probably be dropped shortly." On December 31st, 2021, their lawyer states: "We got unlucky with the judge that was chosen for the case, and only have a 50% chance of winning. I think we should probably settle. They should be happy to settle for $2,000,000." On December 31st, 2022, their lawyer states: They didn't accept our settlement offer and we're gonna lose. Instructions 1) In accounting, what do we call this type of situation? 2) Detail the impact to the financial statements on December 31, 2020 and explain your rationale. 3) Detail the impact to the financial statements on December 31, 2021 and explain your rationale. 4) Detail the impact to the financial statements on December 31, 2022 and explain your rationale. 5) Explain two reasons why the financial statement impacts of this scenario might be frustrating for management