A company discloses gain contingencies in the notes only when a high probability exists for realizing them.

Question

Quizplus · Accepted Answer

According to the accounting principle of conservatism, gain contingencies should not be recognized until they are certain, but if the possibility of gain is reasonably possible, then it should be disclosed in the notes to the financial statements. Therefore, companies disclose gain contingencies in the notes only when a high probability exists for realizing them.

A Company Discloses Gain Contingencies in the Notes Only When