How Should a Contingent Liability That Is Reasonably Possible but Cannot

question 31

Multiple Choice

How should a contingent liability that is reasonably possible but cannot reasonably be estimated be reported within the financial statements?

• A)It must be recorded and reported as a liability.
• B)It does not need to be recorded or reported as a liability.
• C)It must only be disclosed as a note to the financial statements.
• D)It must be reported as a liability, but not disclosed in a note.

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Definitions:

Biological Relatives

Family members related by blood, such as parents, siblings, and offspring, as opposed to those related by law or marriage.

Adoptees With Schizophrenia

Refers to individuals who were adopted and later diagnosed with schizophrenia, a mental disorder characterized by delusions, hallucinations, and disordered thinking.

Adoptive Relatives

Family members who become part of one's family through the process of adoption, not through biological means.

Medication For Schizophrenia

Pharmaceutically prepared substances used to manage and treat the symptoms of schizophrenia, including antipsychotics.