A Company Has a Contingent Loss That Can Be Estimated

question 50

Multiple Choice

A company has a contingent loss that can be estimated and has a reasonably possible chance of occurrence. What reporting does the FASB require regarding this contingency?

• A)It should be put into a memo until the actual loss materializes.
• B)It should be accrued and reported on the financial statements and reported in the notes to the financial statements.
• C)It should be accrued and reported on the financial statements.
• D)It should be reported in the notes to the financial statements.

---

Definitions:

Comparative Advantage

An economic theory that describes how countries or individuals can gain by specializing in the production of goods and services for which they have a lower opportunity cost, leading to beneficial trade.

Absolute Advantage

The ability of a country or entity to produce a good more efficiently (using fewer resources) than another country or entity.

Specializing

The process of focusing on and becoming expert in a particular subject or skill.

Trading

The action of buying, selling, or exchanging goods and services between people or organizations.