The following legal claims exist for VanBeek Co. Identify the accounting treatment for each claim as either.
(a) A liability that is recorded.
(b) An item described in notes to its financial statements.
1. VanBeek (defendant) estimates that a pending lawsuit could result in damages of $250,000; it is reasonably possible that the plaintiff will win the case.
2. VanBeek faces a probable loss on a pending lawsuit; the amount is not reasonably estimable.
3. VanBeek estimates damages in a case at $1,500,000 with a high probability of losing the case.