Question

Blue Co. can estimate the amount of loss that will occur if a foreign government expropriates some of the company's assets in that country the likelihood of expropriation is remote, a loss contingency should be

Multiple Choice
-Disclosed but not eccrued 45 labty
-Disclosell and accrued as a liability
-Accrued es llabilty bur not disclosed

Answer 1

When a loss contingency is considered remote, a company should disclose the potential loss but not accrue it as a liability.

Step-by-step explanation:

When a loss contingency is considered remote, a company should disclose the potential loss but not accrue it as a liability.

This means that Blue Co. should disclose the potential loss that may occur if a foreign government expropriates some of its assets, even though the likelihood of expropriation is remote. However, it should not record this as a liability on its financial statements.

By disclosing the potential loss, Blue Co. is providing transparency to its stakeholders and acknowledging the existence of a risk, even though the likelihood of it happening is low.