Question

A loss contingency can be accrued when it is certain that funds are available to settle the disputed amount. the amount of the loss can be reasonably estimated and it is probable that an asset has been impaired or a liability has been incurred. it is probable that an asset has been impaired or a liability incurred even though the amount of the loss cannot be reasonably estimated. an asset may have been impaired.

Answer 1

Answer: The amount of the loss can be reasonably estimated and it is probable that an asset has been impaired or a liability has been incurred.

Explanation:

A loss contingent is an expense that is based on a future event for instance, if the company loses a law suit and would have to pay settlement costs.

Loss contingents are only permitted to be accrued if the probability that they will happen is likely and even at that, the amount of loss needs to be capable of being reasonably estimated. This way, a proper estimate can be made that will represent the situation adequately.