If the amount of a probable loss on a contingent liability is not determinable,the liability should be
A)accrued and indicated in the body of the financial statements.
B)disclosed in footnotes but not accrued.
C)neither accrued nor disclosed in footnotes.
D)disclosed in the auditor's report but not disclosed on the financial statements.

Question

Quizplus · Accepted Answer

If the amount of a probable loss on a contingent liability is not determinable, the liability should be disclosed in footnotes but not accrued. This is because the liability is not yet certain and estimable. However, it is important to provide information to users of financial statements about the potential impact of the contingency on the entity's financial position and performance. Therefore, disclosure in footnotes is the most appropriate option. The disclosure should include details about the nature of the contingency and the possible range of outcomes.

If the Amount of a Probable Loss on a Contingent