
Concept explainers
Treatment of Contingent Liabilities:
Contingent liabilities are liabilities which may arise in future depending on the future event to happen. The treatment of
Remote Contingent liabilities: The Remote contingent liabilities are those which are not expected to arise in future and hence nor recorded in financial statement as liability and nor disclosed in the notes to account.
Reasonably possible Contingent liabilities: These are such liabilities, the possibilities of arising is quite low and therefore, the not recorded as liabilities and but shown as foot note in financial statement.
Probable Contingent liabilities: The Probable contingent liabilities are those contingent liabilities, the expectation of arising of whom are more than 50%. Therefore, the it will recorded as liabilities if the amount can be estimated with reasonable degree of accuracy and shall be disclosed in the notes to accounts if the amount cannot be estimated.
Requirement1:
The Treatment of liability form current law suit.
Requirement2:
The Treatment of liability from the notice of being sued.
Requirement3:
The Treatment of liability arising from a case in which the business is a defendant.

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Chapter 11 Solutions
Horngren's Accounting, The Financial Chapters (11th Edition) - Standalone Book
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