Tag Archives: asc 450

Gain Contingencies, ASC 450

Gain contingency
–> a gain will incur if certain future events occur or not occur

Recognition of a gain contingency
–> a gain contingency is not recognized
–> in the financial statements

Disclosure of a gain contingency
–> a gain contingency may be disclosed in the notes
–> however, misleading implications about (A) should be avoided
(A) the likelihood of realization

 

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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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Contingencies, ASC 450

Contingencies
1. Gain contingency
–> a gain will incur if certain future events occur or not occur
2. Loss contingency
–> a loss will incur if certain future events occur or not occur

A loss contingency
1. if a loss is “probable” –> recognize in the financial statements
2. if a loss is “reasonably possible” –> disclose in the notes
3. if the possibility of a loss is “remote” –> disclosure is not required

A gain contingency
1. a gain contingency is not recognized in the financial statements
2. if a gain contingency is disclosed in the notes
–> should avoid misleading implications about realization

 

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