Problem: Lone Star Steakhouse has a contingent loss with a  reasonably possible chance of occurrence. How should this contingency be reported? a. It should be accrued and recorded in the financial statements. b. It should be reported in the notes to the financial statements. c. It should be ignored until the actual loss materializes. d. It should either be recorded on the financial statements or reported in the notes to the financial statements.

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Problem Details

Lone Star Steakhouse has a contingent loss with a  reasonably possible chance of occurrence. How should this contingency be reported?

a. It should be accrued and recorded in the financial statements.

b. It should be reported in the notes to the financial statements.

c. It should be ignored until the actual loss materializes.

d. It should either be recorded on the financial statements or reported in the notes to the financial statements.