Taylor Systems' revenues for 2016 totaled $27.2 million. As with most companies, Taylor is a defendant in lawsuits related to its products. Note 14 of the Taylor annual report for 2016 reported the following: 14. Contingencies The company is involved in various legal proceedings. .It is the Company's policy to accrue for amounts related to these legal matters if it is probable that a liability has been incurred and an amount is reasonably estimable. Read the requirements. Requirement 1. Suppose Taylor's lawyers believe that a significant legal judgment against the company is reasonably possible. How should Taylor report this situation in its financial statements? First, let's decide how the lawsuit should be reported in the financial statements The lawsuit should