A company has a probable loss that can only be reasonably estimated within a range of outcomes. No single amount within the range is a better estimate than any other amount. Under U.S. GAAP, what amount of loss contingency should be accrued?
A) the maximum amount of the range
B) the midpoint amount of the range
C) the minimum amount of the range
D) zero

Question

Quizplus · Accepted Answer

Under U.S. GAAP, when a loss contingency is probable and can be reasonably estimated within a range, but no amount within the range is a better estimate than any other, the minimum amount of the range should be accrued.

A Company Has a Probable Loss That Can Only Be