Explain the difference between the contingent liability and an actual liability. Also, give three examples of each.

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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 24, Problem 3RQ

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Explain the difference between the contingent liability and an actual liability. Also, give three examples of each.

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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 24, Problem 3RQ

To determine

Explain the difference between the contingent liability and an actual liability. Also, give three examples of each.

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Answer 3

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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 24, Problem 3RQ

To determine

Explain the difference between the contingent liability and an actual liability. Also, give three examples of each.

Expert Solution & Answer

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Answer 4

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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 24, Problem 3RQ

To determine

Explain the difference between the contingent liability and an actual liability. Also, give three examples of each.

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Answer 5

Chapter 24, Problem 3RQ

To determine

Explain the difference between the contingent liability and an actual liability. Also, give three examples of each.

Answer 6

Chapter 24, Problem 3RQ

To determine

Explain the difference between the contingent liability and an actual liability. Also, give three examples of each.

Answer 7

Chapter 24, Problem 3RQ

To determine

Explain the difference between the contingent liability and an actual liability. Also, give three examples of each.

Answer 8

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Answer 11

Ch. 24 - Prob. 1RQ Ch. 24 - Explain why an auditor is interested in a clients...Ch. 24 - Prob. 3RQ Ch. 24 - Prob. 4RQ Ch. 24 - Prob. 5RQ Ch. 24 - Prob. 6RQ Ch. 24 - Prob. 7RQ Ch. 24 - Prob. 8RQ Ch. 24 - What major considerations should the auditor take...Ch. 24 - Identify five audit procedures normally done as a...

Explain the difference between the contingent liability and an actual liability. Also, give three examples of each.

Solution Summary: The author explains the difference between the contingent liability and an actual liability, and gives three examples of each.

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Explain the difference between the contingent liability and an actual liability. Also, give three examples of each.

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