Which statement concerning liabilities is not correct?
A) If a material liability fails the probability test, it may still warrant disclosure in the notes to the financial statements
B) If a material liability cannot be measured reliably, then it should not be recognised in the accounts
C) If the probability that a previously recognised liability will have to be settled falls below 50%, it should still remain in the balance sheet
D) None of the statements is incorrect, i.e., all are correct statements

Question

Quizplus · Accepted Answer

If the probability that a recognised liability will be settled is less than 50%, then it should be removed from the balance sheet. This is because a liability can only be recognised if it is probable that an outflow of resources will be required to settle it.

Which Statement Concerning Liabilities Is Not Correct