If the likelihood of a loss is reasonably possible rather than probable,we record no entry,but make full disclosure in a footnote to the financial statements to describe the contingency.

Question

Quizplus · Accepted Answer

When the likelihood of a loss is reasonably possible rather than probable, the company should disclose the contingency in the footnotes to the financial statements but no entry is required. This is in accordance with the accounting principle of disclosure.

If the Likelihood of a Loss Is Reasonably Possible Rather