When a Company Encounters a Contingent Liability That Is Remote

question 120

Multiple Choice

When a company encounters a contingent liability that is remote in likelihood,the company should:

• A)include a description in the notes to the financial statements.
• B)record the amount of the liability times the probability of its occurrence.
• C)record the amount of the liability as a long-term liability on the balance sheet.
• D)exclude the information about the contingent liability from its financial statements and notes.

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Definitions:

Ethnic Minority

A group within a country or community which differs from the majority in racial, national, cultural, or linguistic characteristics.

Ethnic Majority

The largest ethnic group within a certain geographical area or society, often holding more power or resources than ethnic minorities.

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A psychological phenomenon where individuals experience discomfort from holding two or more conflicting beliefs, values, or attitudes.

Self-Esteem

An individual’s overall subjective emotional evaluation of their own worth or personal value.