How Should a Contingent Liability That Is Reasonably Possible but Cannot

question 31

Multiple Choice

How should a contingent liability that is reasonably possible but cannot reasonably be estimated be reported within the financial statements?

• A)It must be recorded and reported as a liability.
• B)It does not need to be recorded or reported as a liability.
• C)It must only be disclosed as a note to the financial statements.
• D)It must be reported as a liability, but not disclosed in a note.

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Definitions:

Sulfur

A nonmetallic element with symbol S and atomic number 16, known for its bright yellow crystalline form and used in manufacturing sulfates and sulfuric acid.

Atomic Symbol

A one or two-letter notation representing a chemical element (e.g., H for hydrogen, O for oxygen).

Nickel

A hard, silvery-white metallic element with the elemental symbol "Ni" and atomic number 28, used in alloys and to galvanize iron.

Atomic Symbol

A one or two-letter notation used to represent an element on the periodic table uniquely.