The Key Characteristic of Contingent Liabilities Is

question 17

Multiple Choice

The key characteristic of contingent liabilities is:

• A) the timing of the future sacrifice of economic benefits is uncertain.
• B) the liability will be confirmed only by the occurrence or non-occurrence of a future event not completely within the control of an entity.
• C) a legal dispute must exist at balance date.
• D) the liability does not exist beyond a reasonable doubt.

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Definitions:

Local Currency

The currency of the country in which the foreign operation is based.

Spot Exchange Rate

The exchange rate at a point of time for immediate delivery of the currency in an exchange.

Presentation Currency

The currency in which a company's financial statements are presented, typically the national currency of the country where the company is headquartered.

Functional Currency

The currency of the primary economic environment in which an entity operates, typically used in preparing financial statements.