What is the correct treatment of an event if the likelihood is remote that a possible loss will result in an outflow of benefits?
A) The event must be disclosed.
B) A provision must be established for the event.
C) Management must use judgment in determining how to report the event.
D) The event does not need to be disclosed or a provision provided.

Question

Quizplus · Accepted Answer

When the likelihood of a possible loss resulting in an outflow of benefits is remote, accounting standards generally do not require the event to be disclosed or a provision to be made. This is because the potential impact on the financial statements is considered to be negligible.

What Is the Correct Treatment of an Event If the Likelihood