Which of the following statements regarding contingencies is true?
A)Contingencies that are probable and not estimable appear on the balance sheet.
B)Contingencies that are probable and not estimable are disclosed in the notes to the financial statements.
C)Contingencies that are remote but estimable are disclosed in the notes to the financial statements.
D)Contingent assets are recorded on the balance sheet,but not in the notes to the financial statements.

Question

Quizplus · Accepted Answer

Contingencies that are probable but not estimable must be disclosed in the notes to the financial statements as they could have a material impact on the company's financials. Contingencies that are remote but estimable also need to be disclosed in the notes to the financial statements, whereas contingencies that are both remote and not estimable generally do not require disclosure. Contingent assets, on the other hand, may be recorded on the balance sheet if realization is probable.

Which of the Following Statements Regarding Contingencies Is True