Financial Accounting (12th Edition) (What's New in Accounting)

12th Edition

ISBN: 9780134725987

Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

Publisher: PEARSON

See similar textbooks

Videos

Textbook Question

Chapter 8, Problem 12QC

A contingent liability should be recorded in the accounts

a. if the amount can be reasonably estimated.

b. if the amount is due in cash within one year.

c. if the related future event will probably occur.

d. both b and c

e. both a and c

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.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 8, Problem 11QC

Chapter 8, Problem 8.1EC

Students have asked these similar questions

Media,inc,an advertising agency solve question accounting

need help

answer should be $___.

Chapter 8 Solutions

Financial Accounting (12th Edition) (What's New in Accounting)

Ch. 8 - All of the following are reported as current...Ch. 8 - Prob. 2QC Ch. 8 - Prob. 3QC Ch. 8 - What is accounts payable turnover? a.Purchases on...Ch. 8 - Prob. 5QC Ch. 8 - Nicholas Corporation accrues the interest expense...Ch. 8 - Phoebe Corporation signed a six-month note payable...Ch. 8 - Prob. 8QC Ch. 8 - Backpack Co. was organized to sell a single...Ch. 8 - Prob. 10QC

Ch. 8 - Potential liabilities that depend on future events...Ch. 8 - A contingent liability should be recorded in the...Ch. 8 - Prob. 8.1EC Ch. 8 - Prob. 8.1S Ch. 8 - Prob. 8.2S Ch. 8 - Prob. 8.3S Ch. 8 - Prob. 8.4S Ch. 8 - (Learning Objective 3: Account for a short-term...Ch. 8 - Prob. 8.6S Ch. 8 - (Learning Objective 4: Report warranties in the...Ch. 8 - (Learning Objective 4: Account for accrued...Ch. 8 - (Learning Objective 5: Interpret a companys...Ch. 8 - Prob. 8.10AE Ch. 8 - Prob. 8.11AE Ch. 8 - LO 3 (Learning Objective 3: Purchase inventory,...Ch. 8 - (Learning Objective 3: Record note payable...Ch. 8 - (Learning Objective 3: Account for a short-term...Ch. 8 - Prob. 8.15AE Ch. 8 - Prob. 8.16AE Ch. 8 - Prob. 8.17AE Ch. 8 - Prob. 8.18AE Ch. 8 - Prob. 8.19AE Ch. 8 - Prob. 8.20BE Ch. 8 - Prob. 8.21BE Ch. 8 - LO 3 (Learning Objective 3: Purchase inventory,...Ch. 8 - Prob. 8.23BE Ch. 8 - Prob. 8.24BE Ch. 8 - Prob. 8.25BE Ch. 8 - Prob. 8.26BE Ch. 8 - Prob. 8.27BE Ch. 8 - (Learning Objectives 1, 2, 3, 4: Report current...Ch. 8 - Prob. 8.29BE Ch. 8 - Prob. 8.30Q Ch. 8 - For the purpose of classifying liabilities as...Ch. 8 - Prob. 8.32Q Ch. 8 - Prob. 8.33Q Ch. 8 - Prob. 8.34Q Ch. 8 - Prob. 8.35Q Ch. 8 - Prob. 8.36Q Ch. 8 - Prob. 8.37Q Ch. 8 - Prob. 8.38Q Ch. 8 - Prob. 8.39Q Ch. 8 - Prob. 8.40Q Ch. 8 - Prob. 8.41Q Ch. 8 - Prob. 8.42Q Ch. 8 - Prob. 8.43Q Ch. 8 - Group A LO 1, 2, 3, 4 (Learning Objective 1, 2, 3,...Ch. 8 - Prob. 8.45AP Ch. 8 - LO 1, 2, 3, 4 (Learning Objectives 1, 2, 3, 4:...Ch. 8 - LO 4, 5 (Learning Objectives 4, 5: Account for...Ch. 8 - Group B LO 1, 2, 3, 4 (Learning Objectives 1, 2,...Ch. 8 - Prob. 8.49BP Ch. 8 - Prob. 8.50BP Ch. 8 - Prob. 8.51BP Ch. 8 - Prob. 8.52CEP Ch. 8 - Prob. 8.53SC Ch. 8 - Prob. 8.54DC Ch. 8 - Prob. 8.55DC Ch. 8 - Prob. 8.56EIC Ch. 8 - Prob. 1FF Ch. 8 - Prob. 1GP

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

A contingent liability should be recorded in the accounts a. if the amount can be reasonably estimated. b. if the amount is due in cash within one year. c. if the related future event will probably occur. d. both b and c e. both a and c

Solution Summary: The author explains that the correct option related to contingent liability is option (e).

Videos

Want to see the full answer?

Chapter 8 Solutions