C is corrent. The requirement is to determine the amount Vail should accrue as a contingent liability at 12/31/Y1 to cover possible future fire losses. C is corrent because per ASC Topic 450, a contingent liability shall only be accrued if the likelihood of occurrence is probable and the amount of the loss can be reasonably estimated. An event such as a possible future fire loss is not considered probable at 12/31/Y1 based on the information given nor can an amount of the loss from such an event be reasonably estimated. Thus, an accrual at 12/31/Y1 is not required.
A is incorrect. Per ASC Topic 450, a contingent liability shall only be accrued if the likelihood of occurrence is probable and the amount of the loss can be reasonably estimated. An event such as a possible future fire loss is not considered probable at 12/31/Y1 based on the information given nor can an amount of the loss from such an event be reasonably estimated.
A is incorrect. Per ASC Topic 450, a contingent liability shall only be accrued if the likelihood of occurrence is probable and the amount of the loss can be reasonably estimated. An event such as a possible future fire loss is not considered probable at 12/31/Y1 based on the information given nor can an amount of the loss from such an event be reasonably estimated.
D is incorrect. Per ASC Topic 450, a contingent liability shall only be accrued if the likelihood of occurrence is probable and the amount of the loss can be reasonably estimated. An event such as a possible future fire loss is not considered probable at 12/31/Y1 based on the information given nor can an amount of the loss from such an event be reasonably estimated.
