A constructive obligation arises when
A)the entity is legally obligated to honour the obligation.
B)the entity makes an unconditional promise to pay money in the future.
C)past or present company practice reveals the entity acknowledges a potential economic
Burden.
D)the entity has a conditional obligation which becomes unconditional if an uncertain future
Event occurs.

Question

Quizplus · Accepted Answer

A constructive obligation arises from past or present company practices that indicate the entity acknowledges a potential economic burden, even if not legally enforceable.

A Constructive Obligation Arises When