Contingent liabilities that a company considers to be reasonably possible and for which a company is able to reasonably estimate the amount of a loss are recognized on the balance sheet and the income statement.

Question

Quizplus · Accepted Answer

Only 'probable' contingent liabilities are estimated and recorded on the balance sheet and the income statement. Anything less than 'probable,' (such as 'reasonably possible') is disclosed in the financial statement footnotes.

Contingent Liabilities That a Company Considers to Be Reasonably Possible