Final answer:
Under ASPE, a contingent loss that cannot have its outcome determined is usually disclosed in the financial statement notes, rather than recognized as a liability, unless the loss is probable and can be estimated.
Step-by-step explanation:
Under Accounting Standards for Private Enterprises (ASPE), when the outcome of a contingent loss cannot be determined, the treatment of the loss in the financial statements depends on the level of probability of the event occurring and the ability to estimate the amount of loss.
If the loss is not probable or cannot be reasonably estimated, a contingent loss is typically disclosed in the notes to the financial statements rather than being recognized as a liability on the balance sheet.
For a loss to be accrued and recognized in the financial statements, both the occurrence of the event must be likely, and the amount of the loss must be reasonably estimable.