If the Likelihood of an Obligation Is Remote

question 150

Multiple Choice

If the likelihood of an obligation is remote:

• A)no action is necessary in the accounting treatment.
• B)the disclosure with explanation is put into the financial statement footnotes.
• C)the obligation with the estimated dollars is recorded on the Balance Sheet.
• D)the obligation with the estimated dollars is recorded and put into the footnotes.

---

Definitions:

Directors

Individuals elected by shareholders to oversee the management of a company, making strategic and operational decisions to ensure the company's success.

Related Party Transaction

A deal or arrangement between two parties who are joined by a special relationship prior to the deal.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee but not to control those policies.

Related Parties

Individuals or entities that are closely connected to a business, potentially influencing the financial and operating results.