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 To report: Contingent loss (liability)

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Answer 1

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 13, Problem 13.17E

(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

To report: Contingent loss (liability)

(2)

To determine

To report: Loss in the income statement

(3)

To determine

To report: Liability in balance sheet

(4)

To determine

To prepare: Journal entry to record the loss and liability.

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A Each of the following situations is independent: B CD F G H K L M N R. U V X Y 1 2 1. Change in estimated useful life and residualvalue. Company XYZ purchases equipment on 1 January 20x6 for 3 4 $ 42,000 The company uses the straight line method of depreciation, taking a full year's depreciation in the year 5 of acquisition. The equipment has an estimated residual value of $8,000.00 and an estimated useful life of 4 years. In 20x7, the company decides that the machine really has an origional total life of 5 years and 7 a residual value of $ 7,000.00 8 9 How much is the depreciation expense for 20x7? 10 11 Solution: 12 13 14 15 16 17 18 2. Retrospective change in accounting policy. A private company changes its method of accounting for long term 19 construction contracts from the percentage of completion method (PC) to the compelted contract method (CC) in 20x7. 20 The years affected by the change, and incomes under both methods, appear below (ignore income tax) 21 22 Year 23 20x5 24…

E 10-9 Acquisition cost; noninterest-bearing note LO3 On January 1, 2013, Byner Company purchased a used tractor. Byner paid $5,000 down and signed a noninterest-bearing note requiring $25,000 to be paid on December 31, 2015. The fair value of the tractor is not determinable. An interest rate of 10% properly reflects the time value of money for this type of loan agreement. The company's financial year-end is December 31. Required: 1. Prepare the journal entry to record the acquisition of the tractor. Round computations to the nearest dollar. 2. How much interest expense will the company include in its 2013 and 2014 income statements for this note? 3. What is the amount of the liability the company will report in its 2013 and 2014 statements of financial position for this note?

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 13, Problem 13.17E

(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

To report: Contingent loss (liability)

(2)

To determine

To report: Loss in the income statement

(3)

To determine

To report: Liability in balance sheet

(4)

To determine

To prepare: Journal entry to record the loss and liability.

Expert Solution & Answer

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 13, Problem 13.17E

(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

To report: Contingent loss (liability)

(2)

To determine

To report: Loss in the income statement

(3)

To determine

To report: Liability in balance sheet

(4)

To determine

To prepare: Journal entry to record the loss and liability.

Expert Solution & Answer

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 13, Problem 13.17E

(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

To report: Contingent loss (liability)

(2)

To determine

To report: Loss in the income statement

(3)

To determine

To report: Liability in balance sheet

(4)

To determine

To prepare: Journal entry to record the loss and liability.

Expert Solution & Answer

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Answer 5

Chapter 13, Problem 13.17E

(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

To report: Contingent loss (liability)

(2)

To determine

To report: Loss in the income statement

(3)

To determine

To report: Liability in balance sheet

(4)

To determine

To prepare: Journal entry to record the loss and liability.

Answer 6

Chapter 13, Problem 13.17E

(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

To report: Contingent loss (liability)

Answer 7

Chapter 13, Problem 13.17E

(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

To report: Contingent loss (liability)

Answer 8

(2)

To determine

To report: Loss in the income statement

Answer 9

(2)

To determine

To report: Loss in the income statement

Answer 10

(3)

To determine

To report: Liability in balance sheet

Answer 11

(3)

To determine

To report: Liability in balance sheet

Answer 12

(4)

To determine

To prepare: Journal entry to record the loss and liability.

Answer 13

(4)

To determine

To prepare: Journal entry to record the loss and liability.

Answer 14

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Answer 15

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Answer 16

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Answer 17

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

Solution Summary: The author explains that Contingent Liability is one form of liability that arises based on a particular outcome of an event.

Concept explainers

To report: Loss in the income statement

To report: Liability in balance sheet

To prepare: Journal entry to record the loss and liability.

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Chapter 13 Solutions