Freeman Motors, a motorcycle manufacturer, had the following contingencies. Determine the appropriate accounting treatment for each of the situations Freeman is facing.

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Part 1

a.	Freeman estimates that it is reasonably possible but not likely that it will lose a current lawsuit. Freeman's attorneys estimate the potential loss will be $4,500,000.	Describe the situation in a note to the financial statements. Do not disclose. Record an expense and a liability based on estimated amounts.
b.	Freeman received notice that it was being sued. Freeman considers this lawsuit to be frivolous.	Describe the situation in a note to the financial statements. Do not disclose. Record an expense and a liability based on estimated amounts.
c.	Freeman is currently the defendant in a lawsuit. Freeman believes it is likely that it will lose the lawsuit and estimates the damages to be paid will be $75,000.

Options are

1. describe the situation in a note to the financial statements

2. do not disclose

3. Record and expense and liability based on estimated amounts