Under ASPE, a Contingent Liability Is Recorded in the Accounting

question 70

Multiple Choice

Under ASPE, a contingent liability is recorded in the accounting records

• A)if it is likely that a future event will confirm that a liability has been incurred and the amount of the related loss can be estimated.
• B)if the contingency has not already been disclosed in the notes to the financial statements.
• C)if the amount can be estimated, but the possibility of occurrence is remote.
• D)under no circumstances.

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Definitions:

Transferable Permits

Licenses or rights, often issued by governments, allowing holders to emit a certain amount of pollution or use a specific amount of a resource, which can be bought or sold.

Emission Reduction

The process of diminishing the amount of pollutants released into the environment, particularly relevant in efforts to combat climate change.

Efficient Recycling

The process of collecting, processing, and reusing materials in the most cost-effective and environmentally friendly manner.

Marginal Cost

The cost incurred by producing one additional unit of a product or service.