Under What Condition Is a Pending Lawsuit Recognized as a Liability

question 182

Multiple Choice

Under what condition is a pending lawsuit recognized as a liability on a company's balance sheet?

• A) The amount can be reasonably estimated.
• B) The outcome is probable.
• C) The outcome is reasonably possible.
• D) The outcome is probable and can be reasonably estimated.

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Definitions:

Retrospective Restatement

The process of revising previously issued financial statements to correct errors or to adjust for changes in accounting policies.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide the preparation of financial statements globally.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life.