Under disputed recoverables disclosure, which condition triggers disclosure?

Prepare for the CAS Exam 6 with detailed study materials. Use flashcards and multiple-choice questions, each with hints and explanations, to get exam-ready!

Multiple Choice

Under disputed recoverables disclosure, which condition triggers disclosure?

Disclosures for disputed recoverables hinge on materiality relative to surplus, using two ways to judge materiality. If any one recoverable is in dispute for an amount exceeding 5% of surplus, that alone is material. Similarly, if the total of all disputed recoverables across entities exceeds 10% of surplus, that also is material. Because the rule triggers if either condition is met, you disclose when either the single-entity dispute crosses 5% or the aggregate disputes cross 10%. The other formulations would miss one of these materiality paths: requiring both would be too strict, and focusing only on one threshold would miss the other.

Disclosures for disputed recoverables hinge on materiality relative to surplus, using two ways to judge materiality. If any one recoverable is in dispute for an amount exceeding 5% of surplus, that alone is material. Similarly, if the total of all disputed recoverables across entities exceeds 10% of surplus, that also is material. Because the rule triggers if either condition is met, you disclose when either the single-entity dispute crosses 5% or the aggregate disputes cross 10%. The other formulations would miss one of these materiality paths: requiring both would be too strict, and focusing only on one threshold would miss the other.

More practice questions