A contingency that is remote:
A) should be disclosed in the financial statements.
B) does not need to be disclosed.
C) must be accrued as a loss.
D) is recorded as a contingent liability.

Question

Quizplus · Accepted Answer

A contingency that is remote does not need to be disclosed in the financial statements because there is a rare chance that it will actually occur and affect the company. However, if the contingency becomes more likely to occur, it may need to be disclosed as a potential risk or liability. Accruing a loss or recording it as a contingent liability is only necessary if the contingency is reasonably possible or probable.

A Contingency That Is Remote