At March 13, 2017, the Securities Exchange Commission is in the process of investigating a possible securities law violation by Now Chemical. The SEC has not yet proposed a penalty assessment. Now’s fiscal year ends on December 31, 2016, and its financial statements are published in March 2017. Management feels an assessment is reasonably possible, and if an assessment is made an unfavorable settlement of $13 million is probable. What, if any, action should Now take for its financial statements?

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