A Foreign Subsidiary of a U

question 42

Multiple Choice

A foreign subsidiary of a U.S.-based company has been notified of a loss contingency with an estimated cost ranging between $250,000 and $275,000 which is probable of resulting in an actual loss. Each dollar amount within this range of cost is equally likely of being the actual outcome.According to U.S. GAAP, what is the amount recognized as a provision for loss contingency?

• A) No amount will be recorded but an amount will be disclosed in the notes to the financial statements.
• B) $25,000
• C) $250,000
• D) $262,500
• E) $275,000

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Definitions:

Dishonoring

Disrespect or discredit brought to someone or something, often by not living up to expectations or standards.

Victim

An individual who suffers harm or loss as a result of a crime, accident, or other event or action.

Sexual Contact

Any form of physical interaction between individuals that involves sexual or genital stimulation.

Sexual Behavior

Activities or actions related to the expression of sexuality and sexual feelings towards oneself or others.