Star Company has a contingent liability that has a likelihood of actual occurrence that is classified as probable. Also, the amount of the liability can be reasonably estimated. Under these circumstances, Star is required to Multiple Choice recognize a liability only. disclose but not recognize the liability or the expense. recognize a liability and an expense in its financial statements. recognize an expense only.

Under what condition should a pending lawsuit be recognized as a liability on a company's balance sheet? Multiple Choice The outcome is probable and can be reasonably estimated. The amount can reasonably estimated. The outcome is probable. The outcome is reasonably possible.

On March 1, Forward Import-Export Company purchased merchandise costing 70,100 Mexican pesos.  Payment was due, in pesos, on June 1.  The exchange rates of pesos for $1 were as follows: March 1                     $1 = 10.9 pesos June 1                         $1 = 11.4 pesos Round all answers to the nearest dollar. Required: 1.  What is the liability in dollars on March 1? 2.  What is the liability in dollars on June 1? 3.  If Forward pays on June 1, is there an exchange gain or loss?  If so, how much is it?