A gain contingency that is reasonably possible and for which the amount can be reasonably estimated should be
A)accrued
B)disclosed but not accrued
C)neither accrued nor disclosed
D)classified as an appropriation of retained earnings

Question

Quizplus · Accepted Answer

A gain contingency that is reasonably possible and for which the amount can be reasonably estimated should be disclosed but not accrued. This means that the information about the potential gain should be mentioned in the footnotes of the financial statements, but it should not be recorded as an asset or income until the contingency becomes certain. This approach follows the conservatism principle of accounting where potential gains are not recognized until they are realized.

A Gain Contingency That Is Reasonably Possible and for Which