Final Answer:
The standard that addresses what to do for contingent gains in Week 6 is ASC 450-30, Gain Contingencies.
Step-by-step explanation:
ASC 450-30, also known as FASB Statement No. 5, provides guidelines for accounting treatment when there are contingent gains. Contingent gains are potential future inflows of economic benefits that depend on future events that are beyond the control of the reporting entity. According to this standard, contingent gains should not be recognized until they are realized. Recognition occurs when it is probable that the gain will be realized, and the amount can be reliably measured. In cases where realization is only possible or remote, no recognition takes place.
This standard is crucial for financial reporting as it ensures that gains are only recognized when they are reasonably assured and can be measured accurately. This approach aligns with the principles of conservatism and prudence in accounting, preventing premature recognition of gains that might not materialize. By adhering to ASC 450-30, companies maintain transparency and reliability in their financial reporting, providing stakeholders with a more accurate picture of the company's financial health.
In practical terms, this means that until the contingency is resolved and the gain is probable and can be reliably measured, it remains off the financial statements. This cautious approach helps prevent overestimating the financial position of a company and ensures that reported gains are reflective of actual economic benefits realized.