Contingent liability : A contingent liability is capable of becoming an actual liability on the occurrence or non-occurrence of an event. A contingent liability is recorded in the books when it is probable or most likely to happen and the amount associated with the liability can be reasonably ascertained, else it is disclosed in the notes to the financial statement. To determine: The reporting of the given situation by the company

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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 14RQ

To determine

Contingent liability:

A contingent liability is capable of becoming an actual liability on the occurrence or non-occurrence of an event. A contingent liability is recorded in the books when it is probable or most likely to happen and the amount associated with the liability can be reasonably ascertained, else it is disclosed in the notes to the financial statement.

To determine:

The reporting of the given situation by the company

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Howard James started a business in 2011 in Jamaica and has been operating in the wholesale/retail industries, where he buys and sells household items to the local market. In 2012, he expanded his business operations and opened two other businesses in Trinidad and Tobago and Antigua and Barbuda, respectively. The annual sales of the respective businesses in 2015 are: Jamaica: J$3,000.00 Trinidad and Tobago: TT$251,000.00 Antigua and Barbuda: $299.00 Mr. James failed to register his business for VAT/GCT as specified by the respective Sales Tax Acts and Regulations. He stated that there is no need for his businesses to be registered because their sales are under the VAT thresholds and thus not required to be registered. a) You are to advise Mr. James if his decision not to register his businesses is justifiable. b) Search the respective VAT Acts for the 3 countries and advise Mr. James of the benefits of being a registered taxpayer; also the penalties for not registering for VAT/GCT.

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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 14RQ

To determine

Contingent liability:

A contingent liability is capable of becoming an actual liability on the occurrence or non-occurrence of an event. A contingent liability is recorded in the books when it is probable or most likely to happen and the amount associated with the liability can be reasonably ascertained, else it is disclosed in the notes to the financial statement.

To determine:

The reporting of the given situation by the company

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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 11, Problem 14RQ

To determine

Contingent liability:

A contingent liability is capable of becoming an actual liability on the occurrence or non-occurrence of an event. A contingent liability is recorded in the books when it is probable or most likely to happen and the amount associated with the liability can be reasonably ascertained, else it is disclosed in the notes to the financial statement.

To determine:

The reporting of the given situation by the company

Expert Solution & Answer

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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 11, Problem 14RQ

To determine