When the Amount of a Contingent Liability Can Be Estimated

question 58

Multiple Choice

When the amount of a contingent liability can be estimated and its likelihood is possible but not probable,the company should:

• A)include a description in the footnotes to the financial statements.
• B)record the amount of the liability times the probability of its occurrence.
• C)record the liability and estimated amount of the loss on the balance sheet.
• D)omit the information about the contingent liability from its financial statements and footnotes.

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Definitions:

Biases

Prejudices or predispositions towards or against something or someone, often in a way that is considered to be unfair.

Prejudices

Preconceived opinions or judgments about people or things that are not based on reason or actual experience.

Language

A system of communication using sounds, symbols, or gestures by which individuals express thoughts, feelings, and ideas.

Stress

The physical or mental response to an external cause, such as pressure, challenge, or demand.