Contingent liabilities: Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability . When the occurrence of the event is remote, no disclosure is required to be made. Requirement 1: The accounting treatment to be followed in the given situation

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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 11, Problem 14E

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 1:

The accounting treatment to be followed in the given situation

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 2:

The accounting treatment to be followed in the given situation

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What adjusting journal entry should be recorded to account for the expiration of this asset on these financial accounting question?

Assume that ACW Corporation has 2024 taxable income of $1,720,000 for purposes of computing the §179 expense. The company acquired the following assets during 2024 (assume no bonus depreciation): (Use MACRS Table 1, Table 2, and Table 5.) Asset Machinery Placed in Service September 12 Basis $ 492,000 Computer equipment Delivery truck February 10 August 21 Qualified real property (MACRS, 15 year, 150% DB) April 2 Total 92,000 115,000 1,402,000 $ 2,101,000 a. What is the maximum amount of §179 expense ACW may deduct for 2024? b. What is the maximum total depreciation that ACW may deduct in 2024 on the assets it placed in service in 2024? Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. a. Maximum §179 expense for 2024 b. Maximum total deductible depreciation for 2024

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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 11, Problem 14E

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 1:

The accounting treatment to be followed in the given situation

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 2:

The accounting treatment to be followed in the given situation

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Answer 3

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 11, Problem 14E

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 1:

The accounting treatment to be followed in the given situation

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 2:

The accounting treatment to be followed in the given situation

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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 11, Problem 14E

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 1:

The accounting treatment to be followed in the given situation

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 2:

The accounting treatment to be followed in the given situation

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Answer 5

Chapter 11, Problem 14E

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 1:

The accounting treatment to be followed in the given situation

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 2:

The accounting treatment to be followed in the given situation

Answer 6

Chapter 11, Problem 14E

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 1:

The accounting treatment to be followed in the given situation

Answer 7

Chapter 11, Problem 14E

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 1:

The accounting treatment to be followed in the given situation

Answer 8

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 2:

The accounting treatment to be followed in the given situation

Answer 9

To determine

Concept Introduction:

Contingent liabilities:

Contingent liabilities may be defined as the liabilities which arise out of occurrence or non-occurrence of uncertain future event e.g. lawsuit filed against the company, guarantees made by the company etc. In order to be recorded as a liability in the books, the future event should be probable and a reliable estimate of the liability should be made. When the event is probable but estimate of the liability cannot be made with certainty and if the event is reasonable possible, they should be reported in the notes to financial statements as contingent liability. When the occurrence of the event is remote, no disclosure is required to be made.

Requirement 2:

The accounting treatment to be followed in the given situation

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 11 - Prob. 1DQ Ch. 11 - Prob. 2DQ Ch. 11 - Prob. 3DQ Ch. 11 - Prob. 4DQ Ch. 11 - Prob. 5DQ Ch. 11 - Prob. 6DQ Ch. 11 - Prob. 7DQ Ch. 11 - Prob. 8DQ Ch. 11 - Prob. 9DQ Ch. 11 - Prob. 10DQ

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