Which of the following statements about Loss Contingencies is TRUE? According to the practice of accounting conservatism, contingency losses do not have to be accrued until they are confirmed, while contingency gains have to be recorded when the event confirming their receipt is probable. Remote Losses do not require disclosure. According to the U.S. GAAP, a loss contingency must be accrued by a charge to income if any of the two conditions is met: 1) it is probable that an asset has been impaired, or a liability has been incurred at the date of the financial statements; 2) the amount of the loss can be reasonably estimated. If a loss is probable but cannot be estimated, it shall not be disclosed in the financial statements.
Which of the following statements about Loss Contingencies is TRUE?
According to the practice of accounting conservatism, contingency losses do not have to be accrued until they are confirmed, while contingency gains have to be recorded when the event confirming their receipt is probable.
Remote Losses do not require disclosure.
According to the U.S. GAAP, a loss contingency must be accrued by a charge to income if any of the two conditions is met: 1) it is probable that an asset has been impaired, or a liability has been incurred at the date of the financial statements; 2) the amount of the loss can be reasonably estimated.
If a loss is probable but cannot be estimated, it shall not be disclosed in the financial statements.
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