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Business Accounting HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT

Contingent liability : It is a potential liability of a company that depends on a future event. The recording of contingent liability is based on the following likelihoods of the event occur in future: Remote Reasonably possible Probable To identify : The correct reporting place of contingent liability.

Contingent liability : It is a potential liability of a company that depends on a future event. The recording of contingent liability is based on the following likelihoods of the event occur in future: Remote Reasonably possible Probable To identify : The correct reporting place of contingent liability.

Solution Summary: The author explains the correct answer to the question of contingent liability, based on the likelihoods of the event occurring in future.

HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT

HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT

7th Edition

ISBN: 9780136505273

Author: MILLER-NOBLES

Publisher: PEARSON

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Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the conting…

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 9QC

To determine

Contingent liability: It is a potential liability of a company that depends on a future event. The recording of contingent liability is based on the following likelihoods of the event occur in future:

Remote

Reasonably possible

Probable

To identify: The correct reporting place of contingent liability.

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Chapter 11, Problem 8QC

Chapter 11, Problem 10QC

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Chapter 11 Solutions

HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT

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