Contingent liabilities must be recorded if: The future event is probable but not estimable. The future event is probable and the amount owed can be reasonably estimated. The future event is remote. ) The amount owed cannot be resonably estimated. The future event is reasonably possible but not estimable.

Question

Contingent liabilities must be recorded if: The future event is probable but not estimable. The future event is probable and the amount owed can be reasonably estimated. The future event is remote. ) The amount owed cannot be resonably estimated. The future event is reasonably possible but not estimable.

Answer 1

The correct answer is:**The future event is probable and the amount owed can be reasonably estimated.**### Explanation:Contingent liabilities are potential obligations that may arise depending on the outcome of a future event. According to accounting standards (e.g., GAAP or IFRS), contingent liabilities must be recorded in the financial statements if **both of the following conditions are met**:1. The future event is **probable** (i.e., likely to occur).2. The amount owed can be **reasonably estimated**.If either of these conditions is not met, the contingent liability is typically disclosed in the notes to the financial statements rather than being recorded as a liability on the balance sheet. For example:- If the future event is **reasonably possible** but not probable, it is disclosed in the notes.- If the future event is **remote**, no disclosure or recording is required.

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