In March $2026,$ an explosion occurred at Crane Co$.\text{'}$s plant, causing damage to area properties. By May $2026,$ no claims had yet been asserted against Crane. However, Crane's management and legal counsel concluded that it was reasonably possible that Crane would be held responsible for negligence, and that $\backslash (\backslash$$ $4900000\backslash )$ would be a reasonable estimate of the damages. Crane's $\backslash (\backslash$$ $5900000\backslash )$ comprehensive public liability policy contains a $\backslash (\backslash$$ $490000\backslash )$ deductible clause. In Crane'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 $\backslash (\backslash$$ $4900000\backslash ).$

As an accrued liability of $\backslash (\backslash$$ $490000\backslash ).$

As a note disclosing a possible liability of $\backslash (\backslash$$ $490000\backslash ).$

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