Young Company Is Involved in a Lawsuit

Multiple Choice

Young Company is involved in a lawsuit. When would the lawsuit be recorded as a liability on the balance sheet?

A) When the loss probability is remote and the amount can be reasonably estimated.
B) When the loss is probable and the amount can be reasonably estimated.
C) When the loss probability is reasonably possible and the amount can be reasonably estimated.
D) When the loss is probable regardless of whether the loss can be reasonably estimateD.A contingent liability that is probable and can be reasonably estimated is reported as a liability on the balance sheet.