Sometimes we need to decide whether a loss should be accrued in financial statements in conjunction with a disclosure note, if a loss just requires a disclosure note, or if no disclosure is necessary to begin with. When a contingency comes after the year-end, a liability should not be accrued because it didn’t exist at the end of the year. But do keep in mind, if the loss is probable and can be estimated, then we must disclose an amount in the note.
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