We record gain contingencies when the gain is probable and the amount is reasonably estimable.We do not record gain contingencies until the gain is certain.

Question

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Gain contingencies are not recorded in the financial statements when they are probable and estimable; instead, they are typically disclosed in the notes to the financial statements. Recording is only done when the gain is realized or virtually certain, to avoid overstating potential income.

We Record Gain Contingencies When the Gain Is Probable and the Amount