The following contingent liabilities would require a company to record a note to the financial statements:-
a.) The liability is possible and cannot be reasonably estimated.
b.) The liability is probable and cannot be reasonably estimated.
c.) The liability is possible and is estimated to be $35,000.
Correct answer is option 1 , 2 & 4 .
Eligible contingent liabilities are recognized as expenses on the income statement and as liabilities on the balance sheet. If the chance of accidental loss is low, i. H. With a probability of less than 50%, the liability should not be recognized on the balance sheet.
Contingent liability is disclosed when it is likely that a transfer of economic benefits will be required to resolve it without making a provision.
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Which of the following contingent liabilities would require a company to record a note to the financial statements
The liability is possible and cannot be reasonably estimated.
The liability is probable and cannot be reasonably estimated.
The liability is remote and estimated to be $15,000.
The liability is possible and is estimated to be $35,000.
The liability is remote and cannot be estimated.
The liability is probable and estimated to be $40,000.
