Which of the following statements about contingent liabilities is incorrect?
A)A disclosure note is required when the loss is reasonably possible and the amount cannot be reasonably estimated.
B)A disclosure note is required when the loss is probable and the amount cannot be reasonably estimated.
C)A disclosure note is required when the loss is reasonably possible and the amount can be reasonably estimated.
D)A disclosure note is required when the loss is remote and the amount can be reasonably estimated.

Question

Quizplus · Accepted Answer

This statement is incorrect because a disclosure note is not required when the loss is remote, regardless of whether or not the amount can be reasonably estimated. Contingent liabilities are disclosed in the footnotes of a financial statement when they are probable, reasonably possible, or when the amount can be reasonably estimated. If the loss is remote, then no disclosure is required.

Which of the Following Statements About Contingent Liabilities Is Incorrect