Asked by Melainah Alford on Apr 24, 2024
Young Company is involved in a lawsuit.When would the lawsuit be recorded as a liability on the balance sheet?
A) When the loss probability is remote and the amount can be reasonably estimated.
B) When the loss is probable and the amount can be reasonably estimated.
C) When the loss probability is reasonably possible and the amount can be reasonably estimated.
D) When the loss is probable regardless of whether the loss can be reasonably estimated.
Liability
A company's financial debt or obligations that arise during the course of its business operations.
Probable Loss
An estimated loss from a contingent liability that is likely to occur and can be reasonably estimated.
Reasonably Possible
Describes a level of likelihood that something might occur, under consideration in areas like assessments of contingent liabilities.
- Master the principles for the recognition, measurement, and disclosure of contingent liabilities within financial statements.
Learning Objectives
- Master the principles for the recognition, measurement, and disclosure of contingent liabilities within financial statements.