Contingencies: A business situation that occurs due to uncertain business conditions is termed contingency. The contingent business situation may create both loss or gain. (a) To prepare: To prepare the journal entry to record contingent liability .

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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 13, Problem 10BE

To determine

Contingencies: A business situation that occurs due to uncertain business conditions is termed contingency. The contingent business situation may create both loss or gain.

(a)

To prepare: To prepare the journal entry to record contingent liability.

To determine

(b)

To prepare: To prepare the journal entry for recording liability.

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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 13, Problem 10BE

To determine

Contingencies: A business situation that occurs due to uncertain business conditions is termed contingency. The contingent business situation may create both loss or gain.

(a)

To prepare: To prepare the journal entry to record contingent liability.

To determine

(b)

To prepare: To prepare the journal entry for recording liability.

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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 13, Problem 10BE

To determine

Contingencies: A business situation that occurs due to uncertain business conditions is termed contingency. The contingent business situation may create both loss or gain.

(a)

To prepare: To prepare the journal entry to record contingent liability.

To determine

(b)

To prepare: To prepare the journal entry for recording liability.

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 13, Problem 10BE

To determine