Audit procedure is a method performed by the auditor, to gather the possible document that helps the auditors to make a strong conclusion. The audit procedure helps to determine the nature of the financial information provided by the customers and all kinds of risks that occur in the financial statements. Audit procedure performs different test of controls to avoid the risks. To define: The contingent liability and three categories used to classify a contingent liability with examples.

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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 17, Problem 17.1RQ

To determine

Concept Introduction:Audit procedure is a method performed by the auditor, to gather the possible document that helps the auditors to make a strong conclusion. The audit procedure helps to determine the nature of the financial information provided by the customers and all kinds of risks that occur in the financial statements. Audit procedure performs different test of controls to avoid the risks.

To define: The contingent liability and three categories used to classify a contingent liability with examples.

Expert Solution & Answer

Explanation of Solution

Contingent liability: Contingent liability is including the amount of loss that the company owes for the future event. If in the future, the condition occurs when there is too much uncertainty surrounding then, the loss occurs while recovering that situation named as contingent liability.

Three categories used to classify the contingent liability are:

Probable: Probable contingency involved the event that is highly expected to occur.
Reasonable possible: Reasonable possible is include the situation when the possibility of occurring the event is more than remote but less than probable.
Remote: when there is no chance of occurrence of future events, it called as remote contingency.

Examples of contingent liabilities are:

Unresolved legal actions.
Disagreements of income tax by internal revenue service while auditing.
Assertions for the warranties.
The receivable that not sell yet, the company agree to purchase those receivables.

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Students have asked these similar questions

Describe the terms of Contingent Liabilities with examples.

Distinguish between a determinable current liability anda contingent liability. Give two examples of each type.

1. What are contingent liabilities and could you give some examples of contingent liabilities? Which two conditions have to be met in order to report a contingent liability on a balance sheet?

Answer 2

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 17, Problem 17.1RQ

To determine

Concept Introduction:Audit procedure is a method performed by the auditor, to gather the possible document that helps the auditors to make a strong conclusion. The audit procedure helps to determine the nature of the financial information provided by the customers and all kinds of risks that occur in the financial statements. Audit procedure performs different test of controls to avoid the risks.

To define: The contingent liability and three categories used to classify a contingent liability with examples.

Expert Solution & Answer

Explanation of Solution

Contingent liability: Contingent liability is including the amount of loss that the company owes for the future event. If in the future, the condition occurs when there is too much uncertainty surrounding then, the loss occurs while recovering that situation named as contingent liability.

Three categories used to classify the contingent liability are:

Probable: Probable contingency involved the event that is highly expected to occur.
Reasonable possible: Reasonable possible is include the situation when the possibility of occurring the event is more than remote but less than probable.
Remote: when there is no chance of occurrence of future events, it called as remote contingency.

Examples of contingent liabilities are:

Unresolved legal actions.
Disagreements of income tax by internal revenue service while auditing.
Assertions for the warranties.
The receivable that not sell yet, the company agree to purchase those receivables.

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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 17, Problem 17.1RQ

To determine

Concept Introduction:Audit procedure is a method performed by the auditor, to gather the possible document that helps the auditors to make a strong conclusion. The audit procedure helps to determine the nature of the financial information provided by the customers and all kinds of risks that occur in the financial statements. Audit procedure performs different test of controls to avoid the risks.

To define: The contingent liability and three categories used to classify a contingent liability with examples.

Expert Solution & Answer

Explanation of Solution

Contingent liability: Contingent liability is including the amount of loss that the company owes for the future event. If in the future, the condition occurs when there is too much uncertainty surrounding then, the loss occurs while recovering that situation named as contingent liability.

Three categories used to classify the contingent liability are:

Probable: Probable contingency involved the event that is highly expected to occur.
Reasonable possible: Reasonable possible is include the situation when the possibility of occurring the event is more than remote but less than probable.
Remote: when there is no chance of occurrence of future events, it called as remote contingency.

Examples of contingent liabilities are:

Unresolved legal actions.
Disagreements of income tax by internal revenue service while auditing.
Assertions for the warranties.
The receivable that not sell yet, the company agree to purchase those receivables.

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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 17, Problem 17.1RQ

To determine

Concept Introduction:Audit procedure is a method performed by the auditor, to gather the possible document that helps the auditors to make a strong conclusion. The audit procedure helps to determine the nature of the financial information provided by the customers and all kinds of risks that occur in the financial statements. Audit procedure performs different test of controls to avoid the risks.

To define: The contingent liability and three categories used to classify a contingent liability with examples.

Expert Solution & Answer

Explanation of Solution

Contingent liability: Contingent liability is including the amount of loss that the company owes for the future event. If in the future, the condition occurs when there is too much uncertainty surrounding then, the loss occurs while recovering that situation named as contingent liability.

Three categories used to classify the contingent liability are:

Probable: Probable contingency involved the event that is highly expected to occur.
Reasonable possible: Reasonable possible is include the situation when the possibility of occurring the event is more than remote but less than probable.
Remote: when there is no chance of occurrence of future events, it called as remote contingency.

Examples of contingent liabilities are:

Unresolved legal actions.
Disagreements of income tax by internal revenue service while auditing.
Assertions for the warranties.
The receivable that not sell yet, the company agree to purchase those receivables.

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Answer 5

Chapter 17, Problem 17.1RQ

To determine

Concept Introduction:Audit procedure is a method performed by the auditor, to gather the possible document that helps the auditors to make a strong conclusion. The audit procedure helps to determine the nature of the financial information provided by the customers and all kinds of risks that occur in the financial statements. Audit procedure performs different test of controls to avoid the risks.

To define: The contingent liability and three categories used to classify a contingent liability with examples.

Expert Solution & Answer

Explanation of Solution

Contingent liability: Contingent liability is including the amount of loss that the company owes for the future event. If in the future, the condition occurs when there is too much uncertainty surrounding then, the loss occurs while recovering that situation named as contingent liability.

Three categories used to classify the contingent liability are:

Probable: Probable contingency involved the event that is highly expected to occur.
Reasonable possible: Reasonable possible is include the situation when the possibility of occurring the event is more than remote but less than probable.
Remote: when there is no chance of occurrence of future events, it called as remote contingency.

Examples of contingent liabilities are:

Unresolved legal actions.
Disagreements of income tax by internal revenue service while auditing.
Assertions for the warranties.
The receivable that not sell yet, the company agree to purchase those receivables.

Answer 6

Chapter 17, Problem 17.1RQ

To determine

Concept Introduction:Audit procedure is a method performed by the auditor, to gather the possible document that helps the auditors to make a strong conclusion. The audit procedure helps to determine the nature of the financial information provided by the customers and all kinds of risks that occur in the financial statements. Audit procedure performs different test of controls to avoid the risks.

To define: The contingent liability and three categories used to classify a contingent liability with examples.

Expert Solution & Answer

Explanation of Solution

Contingent liability: Contingent liability is including the amount of loss that the company owes for the future event. If in the future, the condition occurs when there is too much uncertainty surrounding then, the loss occurs while recovering that situation named as contingent liability.

Three categories used to classify the contingent liability are:

Probable: Probable contingency involved the event that is highly expected to occur.
Reasonable possible: Reasonable possible is include the situation when the possibility of occurring the event is more than remote but less than probable.
Remote: when there is no chance of occurrence of future events, it called as remote contingency.

Examples of contingent liabilities are:

Unresolved legal actions.
Disagreements of income tax by internal revenue service while auditing.
Assertions for the warranties.
The receivable that not sell yet, the company agree to purchase those receivables.

Answer 7

Chapter 17, Problem 17.1RQ

To determine

Concept Introduction:Audit procedure is a method performed by the auditor, to gather the possible document that helps the auditors to make a strong conclusion. The audit procedure helps to determine the nature of the financial information provided by the customers and all kinds of risks that occur in the financial statements. Audit procedure performs different test of controls to avoid the risks.

To define: The contingent liability and three categories used to classify a contingent liability with examples.

Answer 8

Expert Solution & Answer

Explanation of Solution

Contingent liability: Contingent liability is including the amount of loss that the company owes for the future event. If in the future, the condition occurs when there is too much uncertainty surrounding then, the loss occurs while recovering that situation named as contingent liability.

Three categories used to classify the contingent liability are:

Probable: Probable contingency involved the event that is highly expected to occur.
Reasonable possible: Reasonable possible is include the situation when the possibility of occurring the event is more than remote but less than probable.
Remote: when there is no chance of occurrence of future events, it called as remote contingency.

Examples of contingent liabilities are:

Unresolved legal actions.
Disagreements of income tax by internal revenue service while auditing.
Assertions for the warranties.
The receivable that not sell yet, the company agree to purchase those receivables.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 17 - Prob. 17.1RQ Ch. 17 - Prob. 17.2RQ Ch. 17 - Prob. 17.3RQ Ch. 17 - Prob. 17.4RQ Ch. 17 - Prob. 17.5RQ Ch. 17 - Prob. 17.6RQ Ch. 17 - Prob. 17.7RQ Ch. 17 - Prob. 17.8RQ Ch. 17 - Prob. 17.9RQ Ch. 17 - Prob. 17.10RQ

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