Contingent liabilities whose ultimate payment is highly probable and can be reasonably estimated must be
A)ignored until actual payment is made.
B)disclosed only in the footnotes to the financial statements.
C)recorded in the body of the balance sheet.
D)disclosed in the auditor's report.

Question

Quizplus · Accepted Answer

Contingent liabilities whose ultimate payment is highly probable and can be reasonably estimated must be recorded in the body of the balance sheet. This is because these liabilities are likely to become actual liabilities in the near future, and therefore should be included in the company's financial statements. Ignoring them until actual payment is made or only disclosing them in the footnotes or auditor's report would not accurately reflect the company's financial position.

Contingent Liabilities Whose Ultimate Payment Is Highly Probable and Can