The Music House Issues a Contract to a New Recording

Multiple Choice

The Music House issues a contract to a new recording artist to produce a number of albums over the next five years at $1 million per album.This situation is an example of:

A) A contingent liability that should be recorded in the accounting records.
B) A contingent liability requiring footnote disclosure.
C) An estimated liability,since the number of albums to be produced is not yet determined.
D) A commitment that,if material,may be disclosed in a footnote.