Contingencies: Contingencies are referred to as the undefined future events that may be turn out to be the possible liabilities for the organizations in fore coming period. Examples of contingent liabilities are law suits, environmental cleanup obligations, and warranties for products. Identify what are the criteria must be met before contingency must be recorded as a liability.

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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 22Q

To determine

Contingencies: Contingencies are referred to as the undefined future events that may be turn out to be the possible liabilities for the organizations in fore coming period. Examples of contingent liabilities are law suits, environmental cleanup obligations, and warranties for products.

Identify what are the criteria must be met before contingency must be recorded as a liability.

To determine

To Discuss: If the criteria not met, how contingency should be disclosed.

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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 22Q

To determine

Contingencies: Contingencies are referred to as the undefined future events that may be turn out to be the possible liabilities for the organizations in fore coming period. Examples of contingent liabilities are law suits, environmental cleanup obligations, and warranties for products.

Identify what are the criteria must be met before contingency must be recorded as a liability.

To determine

To Discuss: If the criteria not met, how contingency should be disclosed.

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 22Q

To determine

Contingencies: Contingencies are referred to as the undefined future events that may be turn out to be the possible liabilities for the organizations in fore coming period. Examples of contingent liabilities are law suits, environmental cleanup obligations, and warranties for products.

Identify what are the criteria must be met before contingency must be recorded as a liability.

To determine

To Discuss: If the criteria not met, how contingency should be disclosed.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

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 22Q

To determine