Final answer:
When a loss contingency is remote and the amount of loss is known or reasonably estimable, it should be disclosed but not recognized on the balance sheet.
Step-by-step explanation:
When accounting for a loss contingency that is remote and the amount of loss is known or reasonably estimable, it should be disclosed in the notes to the financial statements. However, it does not need to be recognized as a liability on the balance sheet. This is because a remote loss contingency is not probable, meaning it is not likely to occur. Examples of remote loss contingencies can include pending lawsuits that the company believes it has a strong defense against or potential government fines that the company does not believe it will have to pay.