Chapter 8, Problem 8.13E

To determine

(a)

Concept introduction:

Contingent Liabilities

Liabilities which depends on the occurrence of any event in the future due to happening of any event in past are known as contingent liabilities. An example of contingent liability is the pending lawsuit against company, which if goes against, can damage the company.

The effect of the contingent liabilities associated with material spill on the accounts and financial statements.

To determine

(b)

Contingent Liabilities

Liabilities which depends on the occurrence of any event in the future due to happening of any event in past are known as contingent liabilities. An example of contingent liability is the pending lawsuit against company, which if goes against, can damage the company.

To prepare:

A disclosure in notes of financial statements.