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Historical experience shows that a hospital sometimes receives malpractice claims in the year after the incidents occur. Which of the following statements best expresses the general rule for reporting liabilities for such claims, if risk of loss has not been transferred to a third-party insurer? a. No mention is required to be made of these claims anywhere in the financial statements. b. A note should be prepared discussing the likelihood that claims will be received after the balance sheet date, but no estimate needs to be made of the possibility of loss. c. Liabilities should be recognized in the statements if it is probable that claims will be asserted for incidents occurring before the balance sheet date and the losses can be reasonably estimated. d. Liabilities should be recognized in the statements if claims have been received before the statements are issued; a note should be prepared discussing the likelihood of receiving additional claims after the statements have been issued.
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