LO 3 Problem 9-21A Contingent liabilities Required a. Give an example of a contingent liability that is probable and reasonably estimable. Ho would this type of liability be shown in the accounting records? b. Give an example of a contingent liability that is reasonably possible or probable but ne reasonably estimable. How would this type of liability be shown in the accounting records Give an example of a contingent liability that is remote. How is this type of liability shown. the accounting records? c.

LO 3 Problem 9-21A Contingent liabilities Required a. Give an example of a contingent liability that is probable and reasonably estimable. Ho would this type of liability be shown in the accounting records? b. Give an example of a contingent liability that is reasonably possible or probable but ne reasonably estimable. How would this type of liability be shown in the accounting records Give an example of a contingent liability that is remote. How is this type of liability shown. the accounting records? c.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: 34-Which of the following is NOT a contingent liability? a. Product warranty b. Pending law suit…

Q: When the amount of a contingent liability cannot be reasonably estimated but its likelihood is…

A: There are three types of contingent liabilities and their treatment SR. NO. TYPE TREATMENT…

Q: Which of the following is not considered a characteristic of a liability? O Present obligation. O…

A: Liability means the amount which is to be paid to an outsider by business. It is the present…

Q: state the differences between unearned revenue and accounts payable? both accounts are liabilities…

A: Definition: Normal balance refers to the excess of the amount on one side, over the amount on the…

Q: Which of the following statements is not true about provisions? a. Examples of provisions include…

A: The amount that the business has set aside for anticipated future losses and uncertainties for which…

Q: When should a contingent liability be recognized and reported on the financial statements? A.…

A: Contingent liability: A liability can occur on future uncertain events.

Q: Question 5 You are required to refer to the conceptual Framework and especially the two factors…

A: Answer 5. According to the accounting frame work, Warranty cost/Expense treated as contingent…

Q: Which of the following is not an accrued liability? Question 36 options: A) Warranty…

A: Accrued liabilities are costs that a business has incurred but not yet paid for and recorded in the…

Q: Fair Value (Liabilities) What is Fair Value for a liability? What would be an e.g? Please Explain.

A: The objective of this question is to understand the concept of 'Fair Value' in the context of a…

Q: When recognizing a contingent liability, if the future event is probable (likely) and the amount can…

A: It is a potential obligation that may arise from past events but its existence will be confirmed…

Q: Debt guarantees are not usually disclosed as a contingent llablity. O True False

A: Solution- Debt guarantee are not balance sheet items. They are shown as a contingent liability and…

Q: what accounts are used to record a contingent warranty liability that is probable and estimable but…

A: A provision or accrued liability is usually included in the financial statements for a contingent…

Q: A contingent liability: O Is always of a specific amount Is a potential obligation that depends on a…

A: Solution: A contingent liability is a liability that may occur depending on the outcome of an…

Q: Pursuant to the conceptual framework, for an item to be characterised as a liability the definition…

A: Two Examples of Liabilities: 1) Trade payables: Satisfy all the three essential characteristics of…

Q: Which of the following statements regarding liabilities is true? Liabilities arise through a…

A: Introduction:- Liability is someone legally responsible to pay another person or company.…

Q: The term "provision" as it is used in IAS 37, is most closely related to what term in U.S. GAAP?

A: The term "provision" in IAS 37 (International Accounting Standards 37) is most closely related to…

Q: define contingent liability and give an example. How would you management of a company distort a…

A: Solution Concept Contingent liability Contingent liability means the liability which…

Q: What differentiates a current liability from a long-term liability? Share at least two examples of…

A: Any type of debt that a company owes to a person or another company is referred to as a liability.…

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

LO 3
Problem 9-21A Contingent liabilities
Required
a. Give an example of a contingent liability that is probable and reasonably estimable. How
would this type of liability be shown in the accounting records?
b. Give an example of a contingent liability that is reasonably possible or probable but not
reasonably estimable. How would this type of liability be shown in the accounting records?
c.
Give an example of a contingent liability that is remote. How is this type of liability shown in
the accounting records?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Current liabilities, Provisions and Contingencies

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Under what circumstances is a contingent liability reflected in the accounting records as though an actual liability exists?
Just the last three subparts please, thank you!!!!
Fair Value (Liabilities) What is Fair Value for a liability? What would be an e.g? Please Explain.
Which of the following is most likely to be classified and reported as a current liability? a. Prepaid Expense b. Bond Payable c. Mortgage Payable d. Unearned Revenue O None of the above
True (t) or False (f) _____ Contingent liabilities should be recorded in the accounts if there is a remote possibility that the contingency will actually occur)
Problem 8: Distinguish between an actual liability and a contingent liability. Give an example of 3 different types of contingent liabilities and how they may exist in a company.
Vikrambahi
Under IFRS, a provision is the same as: a. a contingent liability. b. an estimated liability. c. a contingent gain. d. None of the above.
Under what condition should a pending lawsuit be recognized as a liability on a company's balance sheet? Multiple Choice The outcome is probable and can be reasonably estimated. The amount can reasonably estimated. The outcome is probable. The outcome is reasonably possible.
Hi please help with questions, below. Thanks much. What differentiates a current liability from a long-term liability? Share at least two examples of each. What are the differences in accounting for these two types of liabilities?