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Chapter 11: Q5TI (page 597)

Match the likelihood of a future event with the reporting of the contingency. An answer may be selected more than once.

Likelihood of Future Event

How to Report the Contingency

  1. Remote
  1. Do not disclose.
  2. Record an expense and a liability based on estimated amounts.
  3. Describe the situation in a note to the financial statements.

Short Answer

Expert verified

Remote contingency do not disclose.

Step by step solution

01

Reason for remote contingency not disclose

A remote possibility's likelihood of happening in the future is low. A remote contingency does not require the corporation to record a liability or declare it in the notes to the financial statements.

02

Example

A lawsuit against the corporation is one of the most well-known examples of remote contingent liabilities. It depends on an uncertain future event and represents potential losses for the company.

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