Which statement lists the two necessary criteria to charge a loss contingency/asset impairment to operations?

• A. Information prior to the financial statements indicates impairment exists at the date of the financial statements, and the amount can be reasonably estimated
• B. There is an exposure to loss higher than the amount accrued
• C. The loss must be estimated within a specific range
• D. The impairment is recorded regardless of information availability

Answer: (A)

To recognize a loss contingency or asset impairment in the current period, two conditions must be present: there is evidence as of the reporting date that an impairment exists, and the amount of the loss can be reasonably estimated. This pairing ensures that only real, measurable losses are charged to operations, rather than speculative or uncertain amounts. If impairment is indicated but the loss cannot be reasonably estimated, you would disclose the contingency rather than charge it. If there is no impairment indicator, you do not record a charge. The correct wording captures both the existence of impairment and a reasonably estimable amount, while the other options rely on conditions that are not required or can be misleading.