If it is likely that a company will lose a lawsuit and the amount can be reliably estimated then the company must
A) record the asset.
B) disclose only in the notes to the financial statements.
C) not record or disclose any information.
D) record the loss and the liability.

Question

Quizplus · Accepted Answer

According to accounting principles, if a company is likely to lose a lawsuit and the amount of loss can be reliably estimated, the company must recognize the loss and the related liability in its financial statements. This is to ensure that the financial statements provide a true and fair view of the company's financial position.

If It Is Likely That a Company Will Lose a Lawsuit