Final answer:
According to GAAP, disclosure notes are required in financial statements for all contingencies that are either probable or reasonably possible, regardless of whether the loss can be estimated. Therefore, Rice Corporation must provide a disclosure note for all three lawsuits, A, B, and C.
Step-by-step explanation:
When it comes to accounting for contingencies, companies must follow certain guidelines set by accounting principles. According to the Financial Accounting Standards Board (FASB), which prescribes Generally Accepted Accounting Principles (GAAP) in the United States, there are criteria for how a company should report different kinds of contingent liabilities like lawsuits.
For Lawsuit A, since the loss is probable but cannot be estimated, the company should provide a disclosure note in its financial statements to inform users about the nature of the contingency. Similarly, Lawsuit C also requires a disclosure note because the loss is reasonably possible and can be estimated. This allows the readers of the financial statements to be aware of potential liabilities that may impact the company's financial position.
In contrast, while Lawsuit B is only reasonably possible and cannot be estimated, it also requires disclosure according to the guidelines. So, the correct statement among the options would be that a disclosure note is required for each of the lawsuits. This is because the financial reporting standards require disclosure for contingencies that are either probable or reasonably possible, and in the case of a probable loss without a reasonable estimate, or a reasonably possible loss, whether it can be estimated or not.