Question

A company records a contingent liability for a pending lawsuit. As per accounting standards, which of the following is true about how it should be reflected in the financial statements?

Q: Answer-A company records a contingent liability for a pending lawsuit. As per accounting standards, which o...

Contingent liabilities are not recognized in the books unless probable and measurable, but are disclosed in notes if possible as per AS 29 or Ind AS 37.

A Shown as a liability on balance sheet

B Recorded as an asset

C Disclosed in notes unless probability of outflow is remote

D Written off from capital reserve

E No action required until final verdict

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A company records a contingent liability for a pending lawsuit. As per accounting standards, which of the following is true about how it should be reflected in the financial statements?

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