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In which scenario is a journal entry required for a contingent loss? a)The likelihood of the loss is remote, and a reaso...

In which scenario is a journal entry required for a contingent loss?

a)The likelihood of the loss is remote, and a reasonable estimate can be made.

b) The likelihood of the loss is probable, and a reasonable estimate can be made.

c) The likelihood of the loss is probable, and a reasonable estimate cannot be made.

d) The likelihood of the loss is reasonably possible, and a reasonable estimate can be made.

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Answer #1

Contingent loss : Contingent liability is a potential liability that may occur, depending on the outcome of an uncertain future event. A contingent liability is recorded in the accounting records if the contingency is likely and the amount of the liability can be reasonably estimated. The liability may be disclosed in a footnote on the financial statements or not reported at all if both conditions are not met.

Answer : D) The likelihood of the loss is reasonably possible, and reasonable estimate can be made.

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