Which one of the following is a contingent loss that is required to be disclosed only in a note to the financial statements?
A) A loss that is reasonably possible and the amount can be reasonably determined.
B) A loss that probably will never materialize, and the amount cannot be reasonably estimated.
C) A probable loss of a known amount.
D) A probable loss of a reasonably estimated amount.

Question

Quizplus · Accepted Answer

A contingent loss that is reasonably possible and the amount can be reasonably determined is required to be disclosed only in a note to the financial statements. This is because it does not meet the criteria for recognition as a liability in the financial statements. Options B, C, and D all require recognition in the financial statements either as a provision or a liability, depending on the degree of certainty around the loss event and the amount of the loss.

Which One of the Following Is a Contingent Loss That