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 only be disclosed as a note to the financial statements.
D)It must be reported as a liability,but not recorded.

Question

Quizplus · Accepted Answer

A contingency that is reasonably possible but cannot reasonably be estimated must be disclosed in the notes to the financial statements. It does not meet the criteria for recognition as a liability in the financial statements. Therefore, it would not be recorded or reported as a liability.

Which of the Following Is Correct with Respect to a Contingent