Which of the following would appear on the balance sheet as a current liability?
A)A probable loss in the amount of $4 million from a pending lawsuit.
B)A possible loss in the amount of $4 million from a pending lawsuit.
C)A probable loss from a pending lawsuit, the amount of which is not yet determinable.
D)A lawsuit for $4 million for which the likelihood of loss is remote.

Question

Quizplus · Accepted Answer

A probable loss from a pending lawsuit in a specific amount ($4 million) meets the criteria for a current liability as it is likely to be settled within the current accounting period and the amount is reasonably estimable. Choices B, C, and D do not meet these criteria.

Which of the Following Would Appear on the Balance Sheet