A contingent liability should be disclosed in a note to the financial statements rather than being recorded if:
A)The likelihood of a loss is remote.
B)The likelihood of a loss is reasonably possible.
C)The likelihood of a loss is probable.

Question

Quizplus · Accepted Answer

A contingent liability should be disclosed in a note to the financial statements if the likelihood of a loss is reasonably possible. If the likelihood is remote, disclosure is not necessary, and if the likelihood is probable, it should be recorded as a liability.

A Contingent Liability Should Be Disclosed in a Note to the Financial