When a Company Encounters a Contingent Liability That Is Remote

question 98

Multiple Choice

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

• A) include a description in the footnotes 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) omit the information about the contingent liability from its financial statements and footnotes.

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Definitions:

Adaptation

The process of adjusting to new conditions or environments.

Managerial Assignment

Tasks or responsibilities assigned to managers or supervisory positions within an organization.

Balance Sheet Approach

A method in international human resource management that aims to equalize the purchasing power of employees working abroad to that of employees in the home country.

Expatriate Compensation

The package of salary, benefits, allowances, and incentives offered to employees who are sent to work in a foreign country by their employer.