Detailed Answer
(d) At 12/31/Y2, Halsey’s contingent liability of
$50,000 is no longer probable due to the favorable judgment and
the inability to predict the outcome of the appeal. Therefore, no
liability should be reported in the balance sheet. Gain contingencies
are not reflected in the accounts until realized, so the
$30,000 asset is not reported in the 12/31/Y2 balance sheet,
either.