Question

A potential lawsuit claim is disclosed in the notes when the claim cannot be reasonably estimated but is reasonably possible. Group starts:

a) True
b) False

Answer 1

The statement "A potential lawsuit claim is disclosed in the notes when the claim cannot be reasonably estimated but is reasonably possible" is true. When a claim is reasonably possible but cannot be reasonably estimated, it means that there is a chance that a lawsuit may be filed in the future, but the exact amount of the claim cannot be determined.

Step-by-step explanation:

The statement "A potential lawsuit claim is disclosed in the notes when the claim cannot be reasonably estimated but is reasonably possible" is true.

When a claim is reasonably possible but cannot be reasonably estimated, it means that there is a chance that a lawsuit may be filed in the future, but the exact amount of the claim cannot be determined. In this case, the disclosure of the potential claim in the notes is required to inform stakeholders about the potential risk.

For example, if a company is involved in a product liability issue and there is a possibility of future lawsuits, the potential claims would be disclosed in the notes even if the exact amount of the claim cannot be estimated at the time.