A Company Has a Probable Loss That Can Only Be

question 69

Multiple Choice

A company has a probable loss that can only be reasonably estimated within a range of outcomes. No single amount within the range is a better estimate than any other amount. Under IFRS, what amount of loss contingency should be accrued?

• A) the maximum amount of the range
• B) the midpoint amount of the range
• C) the minimum amount of the range
• D) zero

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Definitions:

Incentive Fees

Fees paid to a fund manager based on performance, often as a percentage of the investment gains beyond a specified benchmark.

Hedge Fund Manager

An individual or firm responsible for making investment decisions in a hedge fund to maximize returns and minimize risks.

Survivorship Bias

The error of focusing only on the entities that have survived some process and overlooking those that have failed.

Mutual Funds

Shareholder-funded investment platforms which engage in trading within diversified portfolios under professional management.