Onopea Inc.considered two contingencies at the end of 2016: ** a probable loss in the range of $300,000 to $500,000
** a reasonably possible loss of $150,000
Under U.S.GAAP,what is the balance for contingent liabilities at the end of 2016?
A)$300,000
B)$400,000
C)$450,000
D)$550,000

Question

Quizplus · Accepted Answer

Under U.S. GAAP, when a loss is probable and can be reasonably estimated, the minimum amount in the range is accrued. Therefore, the contingent liability would be $300,000. The reasonably possible loss is not accrued.