GrayCo Has Initiated a Lawsuit Against FinCo for a Copyright

GrayCo has initiated a lawsuit against FinCo for a copyright violation. Negotiations between the lawyers representing the two companies suggest that it is probable that GrayCo will win the case and will collect a $2,000,000 settlement fee. Generally Accepted Accounting Principles

A) require FinCo to recognize a $2,000,000 contingent liability but does not permit GrayCo to recognize a $2,000,000 contingent asset.
B) require FinCo to recognize a $2,000,000 contingent liability and GrayCo to recognize a $2,000,000 contingent asset.
C) require only FinCo to disclose the suit but does not require the company to show the amount of the settlement as a liability.
D) require neither FinCo nor GrayCo to disclose this information in their financial statements.