Pacific Cruise Lines is a defendant in litigation involving a swimming accident on one of its three cruise ships.

Required:

For each of the following scenarios, determine the appropriate way to report the situation. Explain your reasoning and record any necessary entry.

1. The likelihood of a payment occurring is probable, and the estimated amount is $1.2 million.

2. The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $1 to $1.5 million.

3. The likelihood of a payment occurring is reasonably possible, and the estimated amount is $1.2 million.

4. The likelihood of a payment occurring is remote, while the estimated potential amount is $1.2 million.