Standard Company has a contingent liability that has a likelihood of actual occurrence that is classified probable. Also, the amount of the liability can be reasonably estimated. Under these circumstances, Standard is required to:

Recognizes a liability and an expense in its financial statements.

Explanation:

Stuffs or periods like this are said to return up thanks to outvomes that are appeared thanks to uncertain futire events in a very company. This liability format may be a potential liability which will occur within the future, like pending lawsuits or honoring product warranties. If the liability is probably going to occur and therefore the amount may be reasonably estimated, the liability should be recorded within the accounting records of a firm.

Contingent liabilities are recorded to confirm that the financial statements are accurate and meet GAAP or IFRS requirements.

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