Under ASPE, a contingency that is NOT likely to occur
A) should be disclosed in the financial statements.
B) must be accrued as a loss.
C) does not need to be disclosed unless the loss would result in a substantial negative effect on the company's financial position.
D) is recorded as a contingent loss.

Question

Quizplus · Accepted Answer

Under Accounting Standards for Private Enterprises (ASPE), a contingency that is not likely to occur does not need to be disclosed in the financial statements unless it would result in a substantial negative effect on the company's financial position. This approach allows for the omission of information about contingencies that are considered unlikely to happen and thus not significant to the financial statements, unless their potential impact is substantial.

Under ASPE, a Contingency That Is NOT Likely to Occur