Under GAAP, the rule for when a loss contingency must be accrued is that it must be
A) At least remotely possible, and reasonably estimable
B) At least reasonably possible, and reasonably estimable
C) Probable, and reasonably estimable
D) Probable, even if it is not reasonably estimable

Question

Quizplus · Accepted Answer

Under GAAP, a loss contingency must be accrued if it is probable, meaning it is likely to occur. Additionally, the amount of the loss must be reasonably estimable. This means that even if a loss is possible or reasonably possible, it should not be accrued until it is probable. However, if the loss is probable but the amount cannot be reasonably estimated, an accrual should still be recorded, but it should be disclosed in the notes to financial statements rather than as a specific amount on the balance sheet.

Under GAAP, the Rule for When a Loss Contingency Must