When the Amount of a Contingent Liability Can Be Reasonably

question 127

Multiple Choice

When the amount of a contingent liability can be reasonably estimated and its likelihood is probable,the company should:

• A)include a description in the notes to the financial statements.
• B)record the estimated amount of the liability times the probability of its occurrence.
• C)record the estimated amount of the liability on the balance sheet.
• D)exclude the information about the contingent liability from its financial statements and notes.

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Definitions:

Plan

A method of achieving an end.

Accomplishing

The act of achieving or completing a task or goal successfully, often through effort and skill.

Value Analysis

A systematic assessment to identify and eliminate unnecessary costs in a product or service while maintaining or improving its function and quality.

Business Proposition

A value statement that outlines what value a company offers to its customers, how it does so, and why it's unique or better than competitors.