You are auditing Rodgers and Company. You are aware of a potential loss due to noncompliance with environmental regulations. Management has assessed that there is a 40% chance that a $10M payment could result from the non-compliance. The appropriate financial statement treatment is to accrue a $4 million liability. since there is less than a 50% chance of occurrence, ignore. disclose a liability and provide a range of outcomes. since there is greater that a remote chance of occurrence, accrue the $10 million.