Which of the following statements about liabilities is NOT true?
A) An intention to repair a machine in 6 months' time does not give rise to a liability.
B) If a liability is to be reliably measured,estimation procedures cannot be used.
C) For a liability to exist,the entity must not be able to avoid the sacrifice of economic resources.
D) A liability is a present obligation arising from past events.

Question

Quizplus · Accepted Answer

If a liability is to be reliably measured, estimation procedures can be used. In fact, most liabilities require some degree of estimation, such as a provision for future warranty claims or legal settlements. The other statements are true: an intention to repair a machine in the future does not create a liability until the repair becomes a legal obligation, a liability requires a sacrifice of economic resources, and it must arise from past events.

Which of the Following Statements About Liabilities Is NOT True