Question: Increases in equity are recognized only when they are reasonably certain . To be conservative, decreases in equity should be recognized as soon as they

Increases in equity are recognized only when they are reasonably certain . To be conservative, decreases in equity should be recognized as soon as they probably occurred. Suppose an automobile was stolen from Ace Auto Company in January, and the company waits until March to decide that the automobile is gone for good. Conservatism requires that the decrease in equity be recognized when it is reasonably possible —that is, in [January / March].

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