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Question - Lorange AG became involved in a lawsuit with a government agency. The company's legal counsel indicates that there is a 65 percent likelihood that the company will lose this dispute and estimates that the amount the company will have to pay is between $ 500,000 and $ 700,000, with all amounts in that range being equally likely.
Under U.S. GAAP, what amount, if any, should Lorange recognize as a liability related to this lawsuit?
A. $500,000
B. $700,000.
C. $0.
D. $600,000.
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