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:

Collectivization

The process of transforming private assets, properties, or industries into collectively owned entities, often associated with communist or socialist policies.

Relative Deprivation Theory

A theory suggesting that individuals who perceive themselves as having less resources or social advantages than others in their group or society are more likely to engage in social movements or deviant behaviors.

Social Rewards

Benefits or recognitions received from others in a social context, often as a result of one's behavior or achievements.

Absolute Deprivation

A condition characterized by the lack of basic resources necessary for maintaining minimum living standards.