SCENARIO-Company has just been names as defendant in a lawsuit related to a leak of chemicals, from one of your company's plants onto private property. The plaintiff is suing for $7 million in damages. Your company's attorney believe the ultimate amount of loss could range between $3 million and $5 million, with no amount in the range more likely than other amounts in the range. The lawsuit is expected to be resolved in the middle of next year.

Citing from authoritative literature, brief accounting memo using FASB codification reference to prove your findings to the files addressing

Whether a loss should be accrued and for what amount and

What disclosures should be made in the company's financial statements

Memo, code FASB codification reference. Cite FASB codification for each