Beasley Mason Company Is a Defendant in a Lawsuit Alleging

Multiple Choice

Beasley Mason Company is a defendant in a lawsuit alleging damages of $3 billion.The litigation is anticipated to continue for several years,but no reasonable estimate can be made at this time regarding ultimate financial responsibility.This situation is an example of:

A) An $3 billion expense to be recorded in the income statement during the year of the suit.
B) A loss contingency that should be disclosed in the notes to Beasley's financial statements.
C) An estimated liability that must appear in Beasley Mason Company's balance sheet.
D) None of these.No accrual or disclosure is required in Beasley's financial statements.