Which of the following statements about contingent assets and contingent liabilities are correct? 1. A contingent asset should be disclosed by note if an inflow of economic benefits is probable. 2. A contingent liability should be disclosed by note if it is probable that a transfer of economic benefits to settle it will be required, with no provision being made. 3. No disclosure is required for a contingent liability if it is not probable that a transfer of economic benefits to settle it will be required. 4. No disclosure is required for either a contingent liability or a contingent asset if the likelihood of a payment or receipt is remote. A 1 and 4 only C 2, 3 and 4 B 2 and 3 only D 1, 2 and 4
Which of the following statements about contingent assets and contingent liabilities are correct? 1. A contingent asset should be disclosed by note if an inflow of economic benefits is probable. 2. A contingent liability should be disclosed by note if it is probable that a transfer of economic benefits to settle it will be required, with no provision being made. 3. No disclosure is required for a contingent liability if it is not probable that a transfer of economic benefits to settle it will be required. 4. No disclosure is required for either a contingent liability or a contingent asset if the likelihood of a payment or receipt is remote. A 1 and 4 only C 2, 3 and 4 B 2 and 3 only D 1, 2 and 4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
8.
Transcribed Image Text:Which of the following statements
about contingent assets and
contingent liabilities are correct?
1. A contingent asset should be
disclosed by note if an inflow of
economic benefits is probable.
2. A contingent liability should be
disclosed by note if it is probable
that a transfer of economic
benefits to settle it will be
required, with no provision being
made.
3. No disclosure is required for a
contingent liability if it is not
probable that a transfer of
economic benefits to settle it will
be required.
4. No disclosure is required for
either a contingent liability or a
contingent asset if the likelihood
of a payment or receipt is remote.
A 1 and 4 only C 2, 3 and 4
B 2 and 3 only D 1, 2 and 4
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