The Commonwealth of Virginia filed suit in October 2022 against Northern Timber Corporation, seeking civil penalties and injunctive relief for violations of environmental law regulating forest conservation. When the 2023 financial statements were issued in 2024, Northern had not reached a settlement with state authorities, but legal counsel advised Northern Timber that it was probable the ultimate settlement would be $1,198,000 in penalties. The following entry was recorded:

General Journal	Debit	Credit
Loss--Litigation	1,198,000
Liability--Litigation		1,198,000

Late in 2024, a settlement was reached with state authors to pay a total of $760,000 to cover the cost of violations

Required:

1. Prepare any journal entires related to the change. (Record revision of the liability on the basis of the new estimate)

2. Would a disclosure note be required for the change in estimate?