CFA Practice Question

CFA Practice Question

A loss contingency should be accrued on a company's records only if it is
A. probable that a liability has been incurred and the amount of the loss is unknown.
B. probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
C. reasonably possible that a liability has been incurred and the amount of the loss is known.
Explanation: Loss contingencies should be accrued when information available prior to the issuance of financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred, and the amount of the loss can be reasonably estimated.

User Contributed Comments 1

User Comment
danlan Amount need not be known, but can be reasonably estimated.
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