A company has a probable contingent gain that can be reasonably estimated. What reporting does the FASB require regarding this contingency?
A)It should be ignored until the actual gain materializes.
B)It should either be recorded on the financial statements or reported in the notes to the financial statements.
C)It should be accrued and reported in the financial statements.
D)It should be reported in the notes to the financial statements.

Question

Quizplus · Accepted Answer

The FASB requires that probable contingent gains should not be recognized in the financial statements until they are realized. They are typically not disclosed in the notes either, to avoid misleading users of the financial statements.

A Company Has a Probable Contingent Gain That Can Be