Which of the following is correct with respect to a contingent liability that is "reasonably possible" but "cannot reasonably be estimated"?
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 be reported as a liability, but not recorded.
D) It must only be disclosed as a note to the financial statements.

Question

Quizplus · Accepted Answer

A contingent liability that is "reasonably possible" but "cannot reasonably be estimated" must be disclosed as a note to the financial statements in accordance with accounting standards. However, it should not be recorded or reported as a liability until more information becomes available to estimate the amount of impact it may have on the financial statements.

Which of the Following Is Correct with Respect to a Contingent