Ask Question
12 October, 04:46

There is a possibility of a safety hazard for a manufactured product. As yet, no claim has been made for damages, though there is a reasonable possibility that a claim will be made. If a claim is made, it is probable that damages will be paid and the amount of the loss can be reasonably estimated. This possible loss must be:

Answers (1)
  1. 12 October, 05:38
    Accrued: No; Disclosed: No


    In accrual accounting an expense or revenue is only recorded when incurred and earned respectively.

    In this instance there is a possibility of a safety hazard for manufactured product.

    Since no claim has been made yet we do not accrued any amount.

    The principle of full disclosure requires that a business discloses information that significantly influenced a business's financial statement.

    No claims have been made on the safety hazard, although there is reasonable possibility a claim can be made and damages can be estimated.

    For the business this is irrelevant to be disclosed as no claim has actually been mad that can affect the business.
Know the Answer?