If Management Determines the Loss Contingency Is Probable and an Amount

Multiple Choice

If management determines the loss contingency is probable and an amount can be reasonably estimated, then the company _______.

A) must record a liability and a related expense or loss, and disclose the relevant details of the event in the notes to the financial statements
B) must record an asset and a related expense or loss, and disclose the relevant details of the event in the notes to the financial statements
C) must record a liability and a related depreciation expense or loss, and disclose the relevant details of the event in the notes to the financial statements
D) should include a note in the notes to the financial statements but need not record an entry in accounting journals