A company is facing a class-action lawsuit in the upcoming year. It is possible, but not probable, that the company will have to pay a settlement of approximately $2,000,000. How would this fact be reported in the financial statements to be issued at the end of the current month?

a. $2,000,000 in the Current Liability section.

b. $2,000,000 in the Long-Term Liability section.

c. In a descriptive narrative in the footnote section.

d. None because disclosure is not required.

(Appendix)