Loss Contingencies, ASC 450

Loss contingency
–> a loss will incur if certain future events occur or not occur

Recognition of a loss contingency
1. Recognized in the financial statements
2. Disclosed in the notes

Recognized in the financial statements
–> if both (A) and (B) are satisfied
(A) it is “probable” that a loss will incur
(B) amount of loss can be reasonably estimated

Disclosed in the notes, without recognition
–> if it is “reasonably possible” that a loss will incur

Disclosure is not required
–> if the possibility of loss is “remote”

 

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