Accounting treatment for contingencies: The contingent liabilities are the potential liabilities that may arise, depending on the outcome of an uncertain future event. Example warranty claims may arise only if there is some repair or replacement for the goods sold. There are three levels of the contingent liabilities and depending on the levels, the accounting treatment is done. Level Accounting treatment Probable To be accrued Reasonably possible To be shown in footnotes Remote To be ignored. To determine: The accounting treatment of the given independent situations.

Question

Want to see the full answer?

Answer 1

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 E11.23E

To determine

Accounting treatment for contingencies: The contingent liabilities are the potential liabilities that may arise, depending on the outcome of an uncertain future event. Example warranty claims may arise only if there is some repair or replacement for the goods sold.

There are three levels of the contingent liabilities and depending on the levels, the accounting treatment is done.

Level Accounting treatment

Probable To be accrued

Reasonably possible To be shown in footnotes

Remote To be ignored.

To determine:

The accounting treatment of the given independent situations.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

On 17-Feb of year 1, Javier purchased a building, including the land it was on, to assemble his new equipment. The total cost of the purchase was $1,302,500; $295,000 was allocated to the basis of the land and the remaining $1,007,500 was allocated to the basis of the building. (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. c. Assume the building was purchased and placed in service on 22-Nov instead of 17-Feb. Using MACRS, what is Javier's depreciation deduction on the building for years 1 through 3? Year 1 Year 2 Year 3 Depreciation Deduction

1) Evaluate the progress and challenges in achieving a single set of global accounting standards. 2) Discuss the benefits and drawbacks of globalization in accounting, providing relevant examples.

Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and the land for $140,000. Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. a. What is Bob's basis in the warehouse and in the land if the appraised value of the warehouse was $100,750 and the appraised value of the land was $115,000? Bob's Basis Warehouse Land

Answer 2

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 E11.23E

To determine

Accounting treatment for contingencies: The contingent liabilities are the potential liabilities that may arise, depending on the outcome of an uncertain future event. Example warranty claims may arise only if there is some repair or replacement for the goods sold.

There are three levels of the contingent liabilities and depending on the levels, the accounting treatment is done.

Level Accounting treatment

Probable To be accrued

Reasonably possible To be shown in footnotes

Remote To be ignored.

To determine:

The accounting treatment of the given independent situations.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

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 E11.23E

To determine

Accounting treatment for contingencies: The contingent liabilities are the potential liabilities that may arise, depending on the outcome of an uncertain future event. Example warranty claims may arise only if there is some repair or replacement for the goods sold.

There are three levels of the contingent liabilities and depending on the levels, the accounting treatment is done.

Level Accounting treatment

Probable To be accrued

Reasonably possible To be shown in footnotes

Remote To be ignored.

To determine:

The accounting treatment of the given independent situations.

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 11, Problem E11.23E

To determine