Assume a firm which in 2019 incurred a contingent liability. What is the effect of the current accounting for contingent liabilities on measurement error on net income, net assets and ROE in 2019?

Group of answer choices

Net assets are overstated, net income is overstated and the effect on ROE could be positive or negative

Net income, net assets are ROE are all overstated

Net assets are overstated, there is no effect on net income and ROE is overstated

There is no effect on any of net assets, net income or ROE

Net assets are overstated, net income is understated and ROE is overstated