5.2 - Contingencies & Commitments

Question 1

An existing condition involving uncertainty as to possible gain or loss that will ultimately be determined when aa future event occurs or fails to occur:

Answer 1

Contingency

Question 2

How are gain contingencies treated?

Answer 2

Disclosure, no JE

Question 3

How are loss contingencies treated based on the following likelihoods:
Probable
Reasonably possible
Remote

Answer 3

Probable: record JE and disclose
Reasonably possible: disclosure
Remote: ignore UNLESS, relates to guaranteed debts, or obligations of commercial banks