Smith & Sons, Inc., received notification from a local attorney that the company was being sued for $5,000,000 for patent infringement. A review of the situation by the company's CEO led to the conclusion that Smith & sons had indeed infringed upon the other company's patented product. Nonetheless the CEO thought the amount of $5 000000 was excessive and intended to litigate the issue. How should the lawsuit be reported in Smith & Sons's annual report? The lawsuit, if material, should be disclosed a liability on the balance sheet. The lawsuit, if material or not doesn't need to be disclosed in the company's financial statements. The lawsuit, if material should be disclosed in the notes to the company's financial statements only