Question

Gain contingencies usually are recognized in a company's income statement when: Multiple Choice The gain is reasonably possible and the amount is reasonably estimable. The gain is certain The amount is reasonably estimable. The gain is probable and the amount is reasonably estimable.]

Answer 1

Answer: The gain is certain

Explanation:

A Gain contingency means that the company stands to make a gain in future if a certain event happens such as the company winning a lawsuit that would result in a good settlement figure for them.

According to U.S. GAAP, gain contingencies are not to be recognized unless it is certain that the gain is coming. If the gain is not certain and is recorded, the income is considered overstated.