When is a contingent liability recorded?
A) When the amount can be reasonably estimated.
B) When the future events are probable to occur and the amount can be reasonably estimated.
C) When the future events are probable to occur.
D) When the future events will possibly occur and the amount can be reasonably estimated.

Question

Quizplus · Accepted Answer

A contingent liability is recorded when the future events are probable to occur and the amount can be reasonably estimated. This means that there is a likelihood that a liability will arise based on past events, and that the amount can be estimated with some degree of accuracy. If the likelihood of the event is uncertain or the amount cannot be reasonably estimated, then the contingency is not recorded until more information becomes available.

When Is a Contingent Liability Recorded