How is a contingent liability reported if it is considered 'reasonably possible'?
A)the liability may or may not be recorded in the footnotes to financial statements
B)the contingent liability should be disclosed in the footnotes to the financial statements
C)the liability should be disclosed in the footnotes as well as on the face of the financial statements.
D)no mention of the liability needs to be made in the financial statements

Question

Quizplus · Accepted Answer

If a contingent liability is considered 'reasonably possible', it should be disclosed in the footnotes to the financial statements. This is in accordance with the accounting standards and is essential for providing information to the users of financial statements. While the liability may or may not be recorded, it should be disclosed to provide clarity on the potential impact on the company's financial position.

How Is a Contingent Liability Reported If It Is Considered