If management can estimate the amount of loss that will occur due to litigation against the company,and the likelihood of the loss is probable,a contingent liability should be

Question

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According to accounting standards, if management can estimate the amount of loss that will occur due to litigation against the company, and the likelihood of the loss is probable, a contingent liability should be disclosed and reported as a liability in the financial statements. This is because the potential loss is likely to occur, and it is relevant to investors and creditors in assessing the financial health of the company. Failure to report this liability could result in misrepresentation or incomplete disclosure of the financial statements. Therefore, the best choice is (B) disclosed and reported as a liability.

If Management Can Estimate the Amount of Loss That Will