A restaurant has been sued because a customer claims to have found a bug in her chili. The company's lawyers believe there is only a remote possibility that the lawsuit will result in an actual liability. Which of the following actions should be taken by the company's management?
A) The situation should be described in a note to the financial statements.
B) The liability should be estimated and recorded as an expense.
C) The possible liability should be ignored.
D) Management should consider resigning.
Correct Answer:
Verified
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