Decorative Concrete produces a concrete overlay for resldentlal and commerclal concrete flooring. Customers have complained thatone of the products results In excessive crackIng. The likelihood the company will Incur a loss on this product Is probable and theamount of the loss Is estimated to be somewhere between $1.3 and $5 million.1. Should this contingent liability be reported, disclosed In a note only, or both?O To be reportedO To be disclosedO Both2. What loss, If any, should Decorative Concrete report In Its Income statement? (Enter your answers In dollars, not In mlllons.)Loss to be reported3. What llabllity, If any, should Decorative Concrete report In Its balance sheet? (Enter your answers In dollars, not In mllllons.)Liability to be reported4. What entry, If any, should be recorded? (If no entry is requlred for a particular transaction/event, select "No Journal EntryRequlred" In the first account fleld. Enter your answers In dollars, not In millons.)View transaction listJournal entry worksheetRecord the contingent liability if needed.Note: Enter debits before credits.TransactionGeneral JournalDebitCredit1.< Prev24 of 50pe here to search99+

Contingent Liability - It is type of liability may occur in future depending upon the outcome of…

Decorative Concrete produces a concrete overlay for residentlal and commerclal concrete flooring. Customers have complained that one of the products results In excessive cracking. The likelihood the company will Incur a loss on this product Is probable and the amount of the loss Is estimated to be somewhere between $1.3 and $5 million. 1. Should this contingent liablity be reported, disclosed In a note only, or both? • To be reported O To be disclosed O Both 2. What loss, if any, should Decorative Concrete report In Its Income statement? (Enter your answers In dollars, not In millons.) Loss to be reported 3. What llability, If any, should Decorative Concrete report In Its balance sheet? (Enter your answers In dollars, not In millons.) Liability to be reported 4. What entry, If any, should be recorded? (If no entry Is required for a particular transaction/event, select "No Journal Entry Requlred" in the first account fleld. Enter your answers In dollars, not In millons.) View transaction list Journal entry worksheet Record the contingent liability if needed. Notei Enter debits before credits. Transaction General Journal Debit Credit 1.

Decorative Concrete produces a concrete overlay for residentlal and commerclal concrete flooring. Customers have complained that one of the products results In excessive cracking. The likelihood the company will Incur a loss on this product Is probable and the amount of the loss Is estimated to be somewhere between $1.3 and $5 million. 1. Should this contingent liablity be reported, disclosed In a note only, or both? • To be reported O To be disclosed O Both 2. What loss, if any, should Decorative Concrete report In Its Income statement? (Enter your answers In dollars, not In millons.) Loss to be reported 3. What llability, If any, should Decorative Concrete report In Its balance sheet? (Enter your answers In dollars, not In millons.) Liability to be reported 4. What entry, If any, should be recorded? (If no entry Is required for a particular transaction/event, select "No Journal Entry Requlred" in the first account fleld. Enter your answers In dollars, not In millons.) View transaction list Journal entry worksheet Record the contingent liability if needed. Notei Enter debits before credits. Transaction General Journal Debit Credit 1.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.

Question

Decorative Concrete produces a concrete overlay for resldentlal and commerclal concrete flooring. Customers have complained that
one of the products results In excessive crackIng. The likelihood the company will Incur a loss on this product Is probable and the
amount of the loss Is estimated to be somewhere between $1.3 and $5 million.
1. Should this contingent liability be reported, disclosed In a note only, or both?
O To be reported
O To be disclosed
O Both
2. What loss, If any, should Decorative Concrete report In Its Income statement? (Enter your answers In dollars, not In mlllons.)
Loss to be reported
3. What llabllity, If any, should Decorative Concrete report In Its balance sheet? (Enter your answers In dollars, not In mllllons.)
Liability to be reported
4. What entry, If any, should be recorded? (If no entry is requlred for a particular transaction/event, select "No Journal Entry
Requlred" In the first account fleld. Enter your answers In dollars, not In millons.)
View transaction list
Journal entry worksheet
Record the contingent liability if needed.
Note: Enter debits before credits.
Transaction
General Journal
Debit
Credit
1.
< Prev
24 of 50
pe here to search
99+

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