The following legal claims exist for Huprey Co. Identify the accounting treatment for each claim as either (a) a liability that is recorded or (b) an item described in notes to its financial statements.

1.

Huprey (defendant) estimates that a pending lawsuit could result in damages of $1,550,000; it is unlikely that the plaintiff will win the case.

A.	A liability that is recorded.
B.	An item described in notes to its financial statements.

2.

Huprey faces a loss on a pending lawsuit that it is unlikely to lose; the amount is reasonably estimable.

A.	An item described in notes to its financial statements.
B.	A liability that is recorded.

3.

Huprey faces a probable loss on a pending lawsuit; the amount is reasonably estimable.

	A. An item described in notes to its financial statements.
	B. A liability that is recorded.