Asked by Anny karoline souza lucena on Jul 09, 2024
Verified
A potential lawsuit claim is disclosed in the notes when the claim cannot be reasonably estimated and it is reasonably possible.
Potential Lawsuit
A legal challenge or claim that has not yet been filed but has the possibility to be brought forward because of existing disputes.
- Describe the handling and reporting of contingent liabilities.
- Recognize the requirements for the disclosure of liabilities in financial statements.
Verified Answer
SD
Shawn DowdenJul 13, 2024
Final Answer :
True
Explanation :
According to Generally Accepted Accounting Principles (GAAP), a potential lawsuit claim should be disclosed in the notes to the financial statements if it cannot be reasonably estimated and it is reasonably possible. Therefore, this statement is true.
Learning Objectives
- Describe the handling and reporting of contingent liabilities.
- Recognize the requirements for the disclosure of liabilities in financial statements.
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