Which of the Following Statements Regarding Contingent Liabilities Is True

question 50

Multiple Choice

Which of the following statements regarding contingent liabilities is true?

• A)If they are probable and estimable, then they must be recorded even before the outcome of the future event.
• B)If they are probable and estimable, then they should be disclosed in the notes to the financial statements.
• C)The accounting principle that determines whether a contingent liability is to be recorded is that of Historical Cost.
• D)Contingencies that are not estimable should not be recorded or disclosed in the financial statements even if they are probable.

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Definitions:

Price Per Share

The market value of a single share of a company's stock, determined by the supply and demand for it in the stock market.

Post-Merger Firm

A company that results from the combination of two or more companies into one entity following a merger.

Cash Acquisition

A method of acquiring another company by purchasing its assets or stock with cash payments.

Synergy Value

The additional value created by the combination of two or more companies or assets, often resulting in cost savings, enhanced revenues, or improved market position.