How Should a Liability That Has a Probable Chance of Occurring

question 38

Short Answer

How should a liability that has a probable chance of occurring but the amount of the loss cannot be reasonably estimated be disclosed?

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Definitions:

Ending Inventory

The total value of all inventory still available for sale at the end of an accounting period, calculated by adding new purchases to beginning inventory and subtracting the cost of goods sold.

Ethical Budgeting

The practice of creating budgets that reflect moral principles and considerations, ensuring resources are allocated in a fair and responsible manner.

Fudge Factor

An additional amount or adjustment made to an estimate to account for potential error or uncertainty.

Slack

A workplace communication tool, or in a different context, the amount of time a project can be delayed without causing a delay to subsequent projects.