If a company estimates that it might lose a lawsuit and pay damages, the probability of losing is 40%. How should this transaction be treated by the accountant?

a.

This is a contingent asset that should be disclosed in footnotes.

b.

This is a contingent asset that should neither be disclosed in footnotes nor recorded.

c.

This is a provision that should be recorded in a journal entry.

d.

This is a contingent liability that should be disclosed in footnotes.

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As Per IAS 37 Contingent Liability can be defined as Present obligation arising ... View the full answer