Contingent Liability Contingent liability is one form of liability that arises based on a particular outcome of a specific event. They are possible obligation that might arise or might not arise based on the future events. It is otherwise called as probable liability or eventual liability. Following are examples of contingencies: Income tax disputes Discounted notes receivable Lawsuits Debt guarantees Failure to follow government regulations Loss contingency: Loss contingency is contingency where existing situation or circumstances where potential losses are resolved and thus, future events are occurred. Examples for loss contingency are as follows: 1. Possible repair to a product under any warranty 2. Defendant in a lawsuit 3. Uncollectible receivables To determine: The ways to treat the settlement.

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Answer 1

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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 13.13BYP

(1)

To determine

Contingent Liability

Contingent liability is one form of liability that arises based on a particular outcome of a specific event. They are possible obligation that might arise or might not arise based on the future events. It is otherwise called as probable liability or eventual liability. Following are examples of contingencies:

Income tax disputes

Discounted notes receivable

Lawsuits

Debt guarantees

Failure to follow government regulations

Loss contingency: Loss contingency is contingency where existing situation or circumstances where potential losses are resolved and thus, future events are occurred. Examples for loss contingency are as follows:

1. Possible repair to a product under any warranty

2. Defendant in a lawsuit

3. Uncollectible receivables

To determine: The ways to treat the settlement.

2.

To determine

To recreate: Journal entry to record the settlement.

3.

To determine

To treat: The settlement if it has occurred after February 25, 2014.

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Trial Balance Rocky Mountain Tours Co. is a travel agency. The nine transactions recorded by Rocky Mountain Tours during June 20Y2, its first month of operations, are indicated in the following T accounts: Cash (1) 40,000 (2) 4,000 (7) 13,100 (3) 5,000 (4) 6,175 (6) 6,000 (9) 1,500 Equipment (3) 15,000 Dividends (9) 1,500 Accounts Receivable Accounts Payable Service Revenue (5) 20,500 (7) 13,100 (6) 6,000 (3) 10,000 (5) 20,500 Supplies (2) 4,000 (8) 2,200 Common Stock Operating Expenses (1) 40,000 (4) 6,175 (8) 2,200

Q1: Wyatt Company had three intangible assets at the end of 2024 (end of the fiscal year): Computer software and Web development technology purchased on January 1, 2024, for $70,000. The technology is expected to have a useful life of four years. A patent purchased from R. Jay on January 1, 2024 for a cash cost of $6,000. Jay had registered the patent with the Canadian Intellectual Property Office seven years earlier on January 1, 2017. The cost of the patent is amortized over its legal life. A trademark that was internally developed and registered with the Canadian government for $13,000 on November 1, 2023. Management decided that the trademark has an indefinite life. Required: 1. What is the acquisition cost of each intangible asset? tech 70k patent 6k trademark 13k 2. Compute the amortization of each intangible asset at December 31, 2024. The company does not use contra accounts. (Round the final answers to the nearest whole dollar.) tech 17.5k patent: ???? 3-a.…

Q1:Wyatt Company had three intangible assets at the end of 2024 (end of the fiscal year): Computer software and Web development technology purchased on January 1, 2024, for $70,000. The technology is expected to have a useful life of four years. A patent purchased from R. Jay on January 1, 2024 for a cash cost of $6,000. Jay had registered the patent with the Canadian Intellectual Property Office seven years earlier on January 1, 2017. The cost of the patent is amortized over its legal life. A trademark that was internally developed and registered with the Canadian government for $13,000 on November 1, 2023. Management decided that the trademark has an indefinite life. Required: 1. What is the acquisition cost of each intangible asset?tech 70kpatent 6ktrademark 13k 2. Compute the amortization of each intangible asset at December 31, 2024. The company does not use contra accounts. (Round the final answers to the nearest whole dollar.)tech 17.5k patent: ???? 3-a. Compute the amount of…

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 13, Problem 13.13BYP

(1)

To determine

Contingent Liability

Contingent liability is one form of liability that arises based on a particular outcome of a specific event. They are possible obligation that might arise or might not arise based on the future events. It is otherwise called as probable liability or eventual liability. Following are examples of contingencies:

Income tax disputes

Discounted notes receivable

Lawsuits

Debt guarantees

Failure to follow government regulations

Loss contingency: Loss contingency is contingency where existing situation or circumstances where potential losses are resolved and thus, future events are occurred. Examples for loss contingency are as follows:

1. Possible repair to a product under any warranty

2. Defendant in a lawsuit

3. Uncollectible receivables

To determine: The ways to treat the settlement.

2.

To determine

To recreate: Journal entry to record the settlement.

3.

To determine

To treat: The settlement if it has occurred after February 25, 2014.

Expert Solution & Answer

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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 13, Problem 13.13BYP

(1)

To determine

Contingent Liability

Contingent liability is one form of liability that arises based on a particular outcome of a specific event. They are possible obligation that might arise or might not arise based on the future events. It is otherwise called as probable liability or eventual liability. Following are examples of contingencies:

Income tax disputes

Discounted notes receivable

Lawsuits

Debt guarantees

Failure to follow government regulations

Loss contingency: Loss contingency is contingency where existing situation or circumstances where potential losses are resolved and thus, future events are occurred. Examples for loss contingency are as follows:

1. Possible repair to a product under any warranty

2. Defendant in a lawsuit

3. Uncollectible receivables

To determine: The ways to treat the settlement.

2.

To determine

To recreate: Journal entry to record the settlement.

3.

To determine

To treat: The settlement if it has occurred after February 25, 2014.

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 13.13BYP

(1)

To determine

Contingent Liability

Contingent liability is one form of liability that arises based on a particular outcome of a specific event. They are possible obligation that might arise or might not arise based on the future events. It is otherwise called as probable liability or eventual liability. Following are examples of contingencies:

Income tax disputes

Discounted notes receivable

Lawsuits

Debt guarantees

Failure to follow government regulations

Loss contingency: Loss contingency is contingency where existing situation or circumstances where potential losses are resolved and thus, future events are occurred. Examples for loss contingency are as follows:

1. Possible repair to a product under any warranty

2. Defendant in a lawsuit

3. Uncollectible receivables

To determine: The ways to treat the settlement.

2.

To determine

To recreate: Journal entry to record the settlement.

3.

To determine

To treat: The settlement if it has occurred after February 25, 2014.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 13, Problem 13.13BYP

(1)

To determine

Contingent Liability

Contingent liability is one form of liability that arises based on a particular outcome of a specific event. They are possible obligation that might arise or might not arise based on the future events. It is otherwise called as probable liability or eventual liability. Following are examples of contingencies:

Income tax disputes

Discounted notes receivable

Lawsuits

Debt guarantees

Failure to follow government regulations

Loss contingency: Loss contingency is contingency where existing situation or circumstances where potential losses are resolved and thus, future events are occurred. Examples for loss contingency are as follows:

1. Possible repair to a product under any warranty

2. Defendant in a lawsuit

3. Uncollectible receivables

To determine: The ways to treat the settlement.

2.

To determine

To recreate: Journal entry to record the settlement.

3.

To determine

To treat: The settlement if it has occurred after February 25, 2014.

Answer 6

Chapter 13, Problem 13.13BYP

(1)

To determine

Contingent Liability

Contingent liability is one form of liability that arises based on a particular outcome of a specific event. They are possible obligation that might arise or might not arise based on the future events. It is otherwise called as probable liability or eventual liability. Following are examples of contingencies:

Income tax disputes

Discounted notes receivable

Lawsuits

Debt guarantees

Failure to follow government regulations

Loss contingency: Loss contingency is contingency where existing situation or circumstances where potential losses are resolved and thus, future events are occurred. Examples for loss contingency are as follows:

1. Possible repair to a product under any warranty

2. Defendant in a lawsuit

3. Uncollectible receivables

To determine: The ways to treat the settlement.

Answer 7

Chapter 13, Problem 13.13BYP

(1)

To determine

Contingent Liability

Contingent liability is one form of liability that arises based on a particular outcome of a specific event. They are possible obligation that might arise or might not arise based on the future events. It is otherwise called as probable liability or eventual liability. Following are examples of contingencies:

Income tax disputes

Discounted notes receivable

Lawsuits

Debt guarantees

Failure to follow government regulations

Loss contingency: Loss contingency is contingency where existing situation or circumstances where potential losses are resolved and thus, future events are occurred. Examples for loss contingency are as follows:

1. Possible repair to a product under any warranty

2. Defendant in a lawsuit

3. Uncollectible receivables

To determine: The ways to treat the settlement.

Answer 8

2.

To determine

To recreate: Journal entry to record the settlement.

Answer 9

2.

To determine

To recreate: Journal entry to record the settlement.

Answer 10

3.

To determine

To treat: The settlement if it has occurred after February 25, 2014.

Answer 11

3.

To determine

To treat: The settlement if it has occurred after February 25, 2014.

Answer 12

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Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 13 - What are the essential characteristics of...Ch. 13 - Prob. 13.2Q Ch. 13 - Bronson Distributors owes a supplier 100,000 on...Ch. 13 - Bank loans often are arranged under existing lines...Ch. 13 - Prob. 13.5Q Ch. 13 - Prob. 13.6Q Ch. 13 - Salaries of 5,000 have been earned by employees by...Ch. 13 - Prob. 13.8Q Ch. 13 - Prob. 13.9Q Ch. 13 - Prob. 13.10Q

Concept explainers

To recreate: Journal entry to record the settlement.

To treat: The settlement if it has occurred after February 25, 2014.

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