Reeves Company filed suit against Higgins, Incorporated, seeking damages for copyright violations. Higgins' legal counsel believes it is probable that Higgins will settle the lawsuit for an estimated amount in the range of $140,000 to $240,000, with all amounts in the range considered equally likely. How should Higgins report this litigation? Multiple Choice As a liability for $240,000 with disclosure of the range In a disclosure only; no liability is reported As a liability for $140,000 with disclosure of the range As a liability for $190,000 with disclosure of the range

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Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.