When the amount of a contingent liability can be reasonably estimated and its likelihood is possible but not 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)accrue the amount of the liability as a long-term liability.
D)exclude any information about the contingent liability from its financial statements and notes.

Question

Quizplus · Accepted Answer

According to GAAP,when an estimated loss can be reasonably estimated and is considered possible but not probable,the company should not record a liability on the balance sheet,but instead,should describe the potential liability in a note to the financial statements.

When the Amount of a Contingent Liability Can Be Reasonably