A certain contingent liability was evaluated at year- end; the company felt it was probable that it would become an actual liability, and the amount could be reasonably estimated. If the accountant decided NOT to report it on the balance sheet or in the notes to the financial statement, this could be considered unethical behaviour.

Question

Quizplus · Accepted Answer

If a contingent liability is probable and can be reasonably estimated, it should be recorded in the financial statements. Not doing so would mislead stakeholders, which is unethical.

A Certain Contingent Liability Was Evaluated at Year- End; the Company