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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Lansdowne Equipment Co. acquired machinery on January 1, 2020, for $400,000. The machinery had an original estimated useful life of 12 years and an estimated salvage value of $40,000. On January 1, 2024, Lansdowne revised the total useful life to 9 years and the salvage value to $20,000. Compute the depreciation expense for the year ending December 31, 2024, assuming Lansdowne uses straight-line depreciation.

Lansdowne Equipment Co. acquired machinery on January 1, 2020, for $400,000. The machinery had an original estimated useful life of 12 years and an estimated salvage value of $40,000. On January 1, 2024, Lansdowne revised the total useful life to 9 years and the salvage value to $20,000. Compute the depreciation expense for the year ending December 31, 2024, assuming Lansdowne uses straight-line depreciation. Help

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

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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 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

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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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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

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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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