When a company encounters a contingent liability that is remote in likelihood,the company should:
A)include a description in the notes to the financial statements.
B)record the amount of the liability times the probability of its occurrence.
C)record the amount of the liability as a long-term liability on the balance sheet.
D)exclude the information about the contingent liability from its financial statements and notes.

Question

Quizplus · Accepted Answer

A contingent liability that is remote in likelihood does not need to be disclosed in the financial statements or notes, as it is not considered significant enough to warrant disclosure.

When a Company Encounters a Contingent Liability That Is Remote