What percentage is probable in accounting?
In a survey of accountants average values and ranges for the three terms were: probable, average 70 percent, range 4080 percent; reasonably possible, 60 percent, range 4080 percent; remote: 10 percent, range 025 percent (Boritz, 1990 p.Click to see full answer. Furthermore, what does probable mean in accounting?Contingencies are reported as liabilities on the balance…
In a survey of accountants average values and ranges for the three terms were: probable, average 70 percent, range 4080 percent; reasonably possible, 60 percent, range 4080 percent; remote: 10 percent, range 025 percent (Boritz, 1990 p.Click to see full answer. Furthermore, what does probable mean in accounting?Contingencies are reported as liabilities on the balance sheet and/or disclosed in the notes to the financial statements when it is probable they will incur a loss and when the loss can be reasonably estimated. Probable is defined as more than 50% likely to occur due to a past obligation.Additionally, what are some examples of contingent liabilities? Potential lawsuits, product warranties, and pending investigation are some examples of contingent liability. If the amount can be estimated, the company sets aside that amount separately to be paid out when the liability arises. Also to know, what are three categories of contingent liabilities? There are three GAAP-specified categories of contingent liabilities: probable, possible, and remote. Probable contingencies are likely to occur and can be reasonably estimated.What does Remote mean in accounting?Remote – is a subset of ‘possible’, at the lower end of the range of probability. It represents events that are not expected to occur, but which cannot be ruled out completely. It is intended to be a tough test because a contingent liability that is remote is not disclosed in the financial statements.
