ASC 450, Contingencies, outlines the accounting and disclosure requirements for loss and gain contingencies. The Codification also provides certain industry-specific contingency guidance, but such guidance is included in the industry sections of the Codification.
What is the disclosure requirement for any acquired contingencies?
450-20-50-1C An entity shall disclose information about a contingency if there is at least a reasonable possibility (that is, more than remote possibility) that a loss may have been incurred regardless of whether the entity has accrued for such a loss (or any portion of that loss).
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What is the difference between IASB and FASB?
The IASB deals with the development of International Financial Reporting Standards and promoting the application of these standards. The FASB is a no-profit organisation, which caters to the development of Generally Accepted Accounting Principles (GAAP) in the interest of the public.
How do you record contingent gains?
The asset and gain are contingent because they are dependent upon some future event occurring or not occurring. Because of the concept of conservatism, a contingent asset and gain will not be recorded in a general ledger account or reported on the financial statements until they are certain.
What are the three potential accounting treatments for a contingent liability?
There are three GAAP-specified categories of contingent liabilities: probable, possible, and remote. Probable contingencies are likely to occur and can be reasonably estimated. Possible contingencies do not have a more-likely-than-not chance of being realized but are not necessarily considered unlikely either.
