How is a contingent liability reported if it is considered 'reasonably possible'?
a. the liability may or may not be recorded in the footnotes to financial statements
b. the contingent liability should be disclosed in the footnotes to the financial statements
c. the liability should be disclosed in the footnotes as well as on the face of the financial statements.
d. no mention of the liability needs to be made in the financial statements
b
FEEDBACK: a. Incorrect.
b. Correct.
c. Incorrect.
d. Incorrect. If the probability of payment is "remote," no mention of the liability needs to be made in the financial statements.
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