Reporting a Loss Contingency A manufacturer of household appliances has potential losses due to the discovery of a possible defect in one of its products. The occurrence of the loss is reasonably possible, and the costs can be reasonably estimated at $50,000. How should this potential loss be treated for financial statement purposes? Choose the most appropriate accounting treatment from the following options. Select one: a. Accrue potential loss in the income statement. b. Disclose potential loss in the notes accompanying the financial statements. c. Do not accrue or disclose the potential loss in the financial statements. d. Either a or b. e. Either b or c