Red Co Can Estimate the Amount of Loss That Will Occur

question 21

Multiple Choice

Red Co. can estimate the amount of loss that will occur if a foreign government expropriates some of the company's assets in that country. If expropriation is probable, a loss contingency should be:

• A) Disclosed but not accrued as a liability.
• B) Disclosed and accrued as a liability.
• C) Accrued as liability but not disclosed.
• D) Neither accrued as a liability nor disclosed.

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Definitions:

Reimburse

To repay money that has been spent or lost, often associated with expenses incurred during employment or other approved activities.

Redecorating

Redecorating involves making changes to the decoration of an interior space, such as altering its style, layout, or furnishings, to refresh or update its appearance.

Expenses

Costs incurred during the operation of a business or the execution of a task.

Passive Fraud

A failure to reveal some material fact about the subject matter of a contract that one party is obligated to reveal to the other party and that intentionally deceives that second party, leading him or her into a damaging contract. Also called concealment and nondisclosure.