If the amount of a probable loss on a contingent liability cannot be estimated but the event is likely,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 cannot be estimated, it should not be accrued in the financial statements. However, it should be disclosed in the footnotes to the financial statements to inform users of the potential liability. This is in accordance with the accounting principle of Full Disclosure.

If the Amount of a Probable Loss on a Contingent