A company has a probable contingent gain that can be reasonably estimated. What reporting does the FASB require regarding this contingency?
A) It should be reported in the notes to the financial statements.
B) It should be ignored until the actual gain materializes.
C) It should either be reported in the notes to the financial statements or recorded on the financial statements.
D) It should be accrued and reported in the financial statements.

Question

Quizplus · Accepted Answer

The FASB requires that probable contingent gains should not be recognized in the financial statements until they are realized. They may be disclosed in the notes if they are material, but they should not be accrued or reported as gains.

A Company Has a Probable Contingent Gain That Can Be