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
A)Disclosed,but not reported as a liability.
B)Disclosed and reported as a liability.
C)Neither disclosed nor reported as a liability.

Question

Quizplus · Accepted Answer

According to generally accepted accounting principles (GAAP), 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, then a contingent liability should be disclosed and reported as a liability on the company's financial statements. This ensures that investors and other stakeholders have access to accurate and relevant information about potential future liabilities that could impact the company's financial position. Therefore, the best choice is B.

If Management Can Estimate the Amount of Loss That Will