Firms do not recognize certain obligations that are uncertain as to amount or timing or both as liabilities, unless those items meet a probability threshold and have a reliable measurement attribute.IFRS refers to these as _____, such as the possible obligation under an unsettled lawsuit.
A)contingent liabilities
B)unrealized contingencies
C)realized contingencies
D)unrecognized contingencies
E)recognized contingencies

Question

Quizplus · Accepted Answer

IFRS refers to uncertain obligations as contingent liabilities, and these are only recognized as liabilities if they meet a probability threshold and have a reliable measurement attribute. Examples of contingent liabilities include potential legal claims or warranties on products. Therefore, the best choice is A.

Firms Do Not Recognize Certain Obligations That Are Uncertain as to Amount