When a company encounters a contingent liability that is remote in likelihood,the company should:
A)include a description in the foot notes to the financial statements.
B)record the amount of the liability times the probability of its occurrence.
C)record the liability and estimated amount of the loss on the balance sheet.
D)omit the information about the contingent liability from its financial statements and footnotes.

Question

Quizplus · Accepted Answer

When a contingent liability is considered remote in likelihood, accounting standards typically allow for the omission of the information about the contingent liability from the financial statements and footnotes, as its impact on the financial position or performance of the company is considered to be negligible.

When a Company Encounters a Contingent Liability That Is Remote