Which of the following is a contingency that should be recorded?
A)The company is being sued and a loss is reasonably possible and reasonably estimable.
B)The company deducts life insurance premiums from employees' paychecks.
C)The company offers a two-year warranty and the expenses can be reasonably estimated.
D)It is probable that the company will receive $100,000 in settlement of a lawsuit.

Question

Quizplus · Accepted Answer

A warranty expense that can be reasonably estimated should be recorded as a liability because it represents a probable future outflow of resources.

Which of the Following Is a Contingency That Should Be