The criteria for recognition of a liability does not include which of the following?
A)The obligation represents a present obligation.
B)The obligation exists as a result of a past transaction or exchange, called the obligating event.
C)The obligation requires the probable future sacrifice of an economic resource that the firm has little or no discretion to avoid.
D)The obligation has a relevant measurement attribute that the firm can quantify with sufficient reliability.
E)The obligation represents a potential future commitment or intent.

Question

Quizplus · Accepted Answer

The criteria for recognition of a liability requires that it represents a present obligation, exists as a result of a past transaction or exchange, requires the probable future sacrifice of an economic resource that the firm has little or no discretion to avoid, and has a relevant measurement attribute that the firm can quantify with sufficient reliability. An obligation that represents a potential future commitment or intent does not meet these criteria and, therefore, is not recognized as a liability.

The Criteria for Recognition of a Liability Does Not Include