A Restaurant Has Been Sued Because a Customer Claims to Have

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 possible liability should be ignored.
C) The liability should be estimated and recorded as an expense.
D) Management should consider resigning.

Correct Answer:

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