Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 10 - Reporting and Analyzing Liabilities - Questions: 25

Answer

If a company can determine a reasonable estimate of the expected liability, and if it is probable that the liability will accrue, it must be recorded as a liability.

Work Step by Step

If both these conditions are not met, the company discloses the basic facts regarding the liability in the notes to its financial statements.
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