Sawtooth Machinery Company was sued during the year by a customer who suffered bodily injury as a result of an alleged defect in Sawtooth Machinery's product. Sawtooth Machinery Company determines that it is reasonably possible they will lose the lawsuit. The Company has also determined that a reasonable estimate of their liability for this litigation will be $500,000 if they lose the lawsuit. How should Sawtooth Machinery Company report this lawsuit in their financial statements according to US GAAP? They should make a disclosure in a financial statement footnote. They should not report this event in their financial statements. They should accrue the $500,000 estimated liability. None of these statements is correct