KLR Oil Company Is Being Investigated, Following an Explosion on One

Multiple Choice

KLR Oil Company is being investigated, following an explosion on one of their oil rigs. They have multiple prior citations for safety violations, and this explosion killed several workers. The related damages are still unknown and cannot be reasonably estimated. What accounting treatment should KLR use for the investigation?

A) Because damages are still unknown, no action is necessary.
B) Because the likelihood of the obligation occurring is remote, footnote disclosure is all that is required.
C) Because the likelihood of the obligation occurring is probable, but the amount is unknown, this should be disclosed in the footnotes.
D) Because the likelihood of the obligation occurring is reasonably possible, this should be disclosed in the footnotes.