Which Statement About Contingencies Is Correct

question 48

Multiple Choice

Which statement about contingencies is correct?

• A)If the future outcome is probable and reliably measurable,a provision is recorded.
• B)If the future outcome is probable,disclosure is required if it is reliably measurable.
• C)If the future outcome is probable,but not reliably measurable,no action is required.
• D)If the future outcome is probable,a provision is required,even if it is not reliably measurable,

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Definitions:

Interest Revenue

Income earned from deposit accounts or investments through the interest paid by the borrower to the lender.

Incremental Borrowing Rate

The interest rate a lessee would have to pay if borrowing over a similar term, and with similar security, the funds necessary to lease or purchase an asset.

Lessor's Implicit Rate

The interest rate used in lease agreements, assumed by the lessor, that when applied to the lease payments, equals the fair value of the leased asset.