A Company Has a Contingent Loss That Can Be Estimated

question 80

Multiple Choice

A company has a contingent loss that can be estimated, but the chance of it occurring is remote. What reporting does the FASB require regarding this contingency?

• A)It should not be accrued or reported in the notes to the financial statements.
• 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.

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Definitions:

Myasthenia Gravis

A chronic autoimmune disorder characterized by weakness and rapid fatigue of any of the muscles under your voluntary control, due to a breakdown in communication between nerves and muscles.

Autoimmune Disease

A disorder in which the body's immune system attacks its own tissues, mistaking them for foreign invaders.

Muscular Weakness

A reduction in the strength of one or more muscles, often resulting in an inability to exert force with one's muscles to the normal extent.

Torsion

A twisting action or strain involving the rotation of a body part on its axis, which can cause stress or deformity.