A contingent liability should be shown by way of a note to the accounts when:
A) there is significant uncertainty as to whether a sacrifice of future economic benefits will be required.
B) the amount of the obligation cannot be measured reliably.
C) estimation procedures were necessary to determine its amount.
D) there is significant uncertainty as to whether a sacrifice of future economic benefits will be required and the amount of the obligation cannot be measured reliably.

Question

Quizplus · Accepted Answer

A contingent liability should be shown by way of a note to the accounts when there is significant uncertainty as to whether a sacrifice of future economic benefits will be required and the amount of the obligation cannot be measured reliably. This means that if a company faces a potential liability that is uncertain and cannot be calculated with certainty, it is considered as a contingent liability and must be noted in the accounts.

A Contingent Liability Should Be Shown by Way of a Note