If management can estimate the amount of loss that will occur due to litigation against the company,and the likelihood of the loss is probable,a contingent liability should be
A)Disclosed,but not reported as a liability.
B)Disclosed and reported as a liability.
C)Neither disclosed nor reported as a liability.
D)Reported as a liability,but not disclosed.

Question

Quizplus · Accepted Answer

If management can estimate the amount of loss that will occur due to litigation against the company and the likelihood of the loss is probable, then it meets the criteria for a contingent liability. In such cases, the contingent liability should be disclosed in the footnotes to the financial statements and reported as a liability on the balance sheet.

If Management Can Estimate the Amount of Loss That Will