Contingent liability

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Answer 1

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Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 10, Problem 14Q

To determine

To explain: Contingent liability

To determine

To explain: How a contingent liability reported under GAAP

To determine

To explain: How the reporting of a contingent liability under GAAP differs from reporting under IFRS.

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Mason Manufacturing is preparing its annual profit plan. As part of its cost analysis, management estimates that $150,000 in purchasing support costs should be allocated to individual suppliers based on the number of shipments received. The company has two major suppliers: • Supplier X received 35 shipments during the year. Supplier Y received 105 shipments during the year. Compute the amount of purchasing costs allocated to Supplier Y, assuming Mason Manufacturing uses number of shipments received to allocate costs. a) $30,000 b) $45,000 c) $90,000 d) $112,500

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Financial accounting

Answer 2

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Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 10, Problem 14Q

To determine

To explain: Contingent liability

To determine

To explain: How a contingent liability reported under GAAP

To determine

To explain: How the reporting of a contingent liability under GAAP differs from reporting under IFRS.

Expert Solution & Answer

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Answer 3

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Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 10, Problem 14Q

To determine

To explain: Contingent liability

To determine

To explain: How a contingent liability reported under GAAP

To determine

To explain: How the reporting of a contingent liability under GAAP differs from reporting under IFRS.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 10, Problem 14Q

To determine

To explain: Contingent liability

To determine

To explain: How a contingent liability reported under GAAP

To determine

To explain: How the reporting of a contingent liability under GAAP differs from reporting under IFRS.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 10, Problem 14Q

To determine

To explain: Contingent liability

To determine

To explain: How a contingent liability reported under GAAP

To determine

To explain: How the reporting of a contingent liability under GAAP differs from reporting under IFRS.

Answer 6

Chapter 10, Problem 14Q

To determine

To explain: Contingent liability

Answer 7

Chapter 10, Problem 14Q

To determine

To explain: Contingent liability

Answer 8

To determine

To explain: How a contingent liability reported under GAAP

Answer 9

To determine

To explain: How a contingent liability reported under GAAP

Answer 10

To determine

To explain: How the reporting of a contingent liability under GAAP differs from reporting under IFRS.

Answer 11

To determine

To explain: How the reporting of a contingent liability under GAAP differs from reporting under IFRS.

Answer 12

Expert Solution & Answer

Answer 13

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Answer 14

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Answer 15

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Contingent liability

Solution Summary: The author explains how a contingent liability under GAAP differs from reporting under IFRS.

Concept explainers

To explain: Contingent liability

To explain: How a contingent liability reported under GAAP

To explain: How the reporting of a contingent liability under GAAP differs from reporting under IFRS.

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