Under FASB rules, a material loss contingency must be disclosed (but not accrued) if it is "reasonably possible."

Question

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This statement is correct under FASB rules. Material loss contingencies must be disclosed in the financial statements if they are considered "reasonably possible," even if they have not yet been accrued. However, if the loss contingency is determined to be more likely than not to occur, it must be both disclosed and accrued in the financial statements.

Under FASB Rules, a Material Loss Contingency Must Be Disclosed