When the amount of a contingent liability cannot be reasonably estimated but its likelihood is probable,the company should:
A)include a description in the notes to the financial statements.
B)record the amount of the liability times the probability of its occurrence.
C)record the amount of the liability as a long-term liability on the balance sheet.
D)exclude the information about the contingent liability from its financial statements and footnotes.

Question

Quizplus · Accepted Answer

A contingent liability that cannot be reasonably estimated cannot be recorded.However,if the contingent liability is probable,the company must disclose information about the potential liability in the notes.

When the Amount of a Contingent Liability Cannot Be Reasonably