Gain contingencies, which are significant and likely and can be reasonably estimated:
A)should be disclosed in a note to the financial statements.
B)should be reported in the body of the financial statements.
C)may be reported in the body of the financial statements.
D)should not be reported or disclosed until the gain is realized.

Question

Quizplus · Accepted Answer

The generally accepted accounting principles require that gain contingencies, which are significant and likely and can be reasonably estimated, should be disclosed in a note to the financial statements. This is because such contingencies can have a material impact on the financial position and performance of the entity and should be communicated to users of the financial statements. Reporting them in the body of the financial statements may result in confusion and misinterpretation of financial results. Therefore, option A is the best choice.

Gain Contingencies, Which Are Significant and Likely and Can Be