The Westminster Corp. is the defendant in a lawsuit involving patent infringement. At the end of 2017, the company's attorneys tell the company that it is "probable" that the company will lose the suit, and the most likely amount it will have to pay is $10,000,000. This is a material number. The proper accounting is to

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The proper accounting in this situation is to accrue a liability of $10,000,000 and make a disclosure of the facts. This is because the company's attorneys have advised that it is probable that the company will lose the lawsuit and have to pay the amount specified, which makes it a material number that should be properly accounted for in the financial statements. This also requires disclosure to investors and other stakeholders, as it can impact the company's financial position and future performance.