If Management Determines the Loss Contingency Is Probable and an Amount

question 106

Multiple Choice

If management determines the loss contingency is probable and an amount can be reasonably estimated, then the company _______.

• A)must record a liability and a related expense or loss, and disclose the relevant details of the event in the notes to the financial statements
• B)must record an asset and a related expense or loss, and disclose the relevant details of the event in the notes to the financial statements
• C)must record a liability and a related depreciation expense or loss, and disclose the relevant details of the event in the notes to the financial statements
• D)should include a note in the notes to the financial statements but need not record an entry in accounting journals

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Definitions:

Pace of Life

The speed at which life's activities are conducted, often influenced by cultural, societal, or individual factors.

Case-study Evidence

A research method that involves the detailed examination of a single example or case, providing in-depth data and insights into complex issues.

Unrepresentative

Not accurately reflecting the characteristics, demographics, or qualities of the whole population.

Case Study

A detailed analysis of a person, group, event, or situation over a period of time, used in both teaching and research contexts.