
Concept explainers
Contingent Liabilities are liabilities which arise from past events and it shall materialize its existence on occurrence or non-occurrence of a future event which may or may not happen.
Sell-Soft is the defendant in numerous law-suits claiming unfair trade practices. It has strong incentives not to disclose these contingent liabilities. GAAP requires the company to report the same. It is necessary for a company to follow the accounting principles laid down in the GAAP. Sell-Soft should hence disclose the same in their statements.
Requirement 1:
To discuss: the reasons of why a company would refrain from disclosing the contingent liabilities in the books of accounts
Requirement 2:
To discuss: the harm caused to bank in the event of a company not disclosing its contingent liabilities
Requirement 3:
the ethical tightrope while reporting contingent liabilities and the reporting responsibilities

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Chapter 11 Solutions
Horngren's Accounting
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- Can you please solve this financial accounting issue?arrow_forward24. General Accounting Problem: The liabilities of Ula Company are $87,060. Also, common stock account is $145,800, dividends are $91,610, revenues are $443,250, and expenses are $316,360. What is the amount of Ula Company's total assets?arrow_forwardWhich financial statement provides an overview of a company’s changes in equity during a specific period?a) Income Statementb) Balance Sheetc) Cash Flow Statementd) Statement of Retainedarrow_forward
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