In March $2026,$ an explosion occurred at Swifty Co$.\text{'}$s plant, causing damage to area properties. By May $2026,$ no claims had yet been asserted against Swifty. However, Swifty's management and legal counsel concluded that it was reasonably possible that Swifty would be held responsible for negligence, and that $$4910000$ would be a reasonable estimate of the damages. Swifty's $$5960000$

comprehensive public liability policy contains a $$510000$ deductible clause. In Swifty's December $31,2025$ financial statements, for which the auditor's fieldwork was completed in April $2026,$ how should this casualty be reported?

As a note disclosing a possible liability of $$510000.$

As a note disclosing a possible liability of $$4910000.$

No note disclosure of accrual is required for $2025$ because the event occurred in $2026.$

As an accrued liability of $$510000.$