Which of the following actions should take place if a grant recipient determines that it is probable that certain costs incurred were unallowable and will ultimately be disallowed by the grantor.
A. The recipient should be recognize a payable
B. The provider should recognize a receivable
C. Both A and B
D. None of the above
C. Both A and B. As a general rule, liabilities must be recognized as soon as the incurrence is considered probable, whereas assets cannot be recognized until they are actually realized. (prohibition of the recognition of gain contingencies). Grantor receivables for disallowed costs are an explicit exception to the general rule.