A Company Has a Contingent Loss That Can Be Estimated

question 66

Multiple Choice

A company has a contingent loss that can be estimated and has a probable chance of occurrence. What reporting does the FASB require regarding this contingency?

• A)It should be accrued and reported on the financial statements and reported in the notes to the financial statements.
• B)It should be accrued and reported on the financial statements.
• C)It should be reported in the notes to the financial statements.
• D)It should be ignored until the actual loss materializes.

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Definitions:

Intellectual Asset

An intellectual asset is knowledge, information, or a creative expression that has value to an organization or individual and is legally protected, such as patents, trademarks, and copyrights.

Licence

The right to use property in common with others.

Intellectual Property Legislation

Laws that protect creations of the mind, such as inventions, literary and artistic works, designs, symbols, names, and images used in commerce.

Specific Reference

A direct mention or citation of a particular source or evidence, used for clarity or support.