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.
Answer: C
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