The following legal claims exist for the Doucet Company. Classify the required accounting treatment for each legal situation as (a) a liability should be recorded, or (b) the legal claim need only be described in the notes to the financial statements.
a. Doucet faces a probable loss on a pending lawsuit; however, the amount of the judgement cannot be reasonably estimated.
b. A plaintiff is suing Doucet Company for a damage award of $1,200,000; it is not probable that the plaintiff will win the case.
c. Doucet Company estimates damages of another case at $3,000,000 and it is probable that Doucet will lose the case.