Write a short note to the client explaining the difference between a liability of an unknown amount and a contingent liability and also make suggestion the manner by which the particular situation must be accounted.

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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 9, Problem 1WC

To determine

Write a short note to the client explaining the difference between a liability of an unknown amount and a contingent liability and also make suggestion the manner by which the particular situation must be accounted.

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Mead Incorporated began operations in Year 1. Following is a series of transactions and events involving its long-term debt investments in available-for-sale securities. Year 1 January 20 Purchased Johnson & Johnson bonds for $20,500. February 9 Purchased Sony notes for $55,440. June 12 Purchased Mattel bonds for $40,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $23,500. July 5 Sold all of the Mattel bonds for $35,850. July 22 Purchased Sara Lee notes for $13,500. August 19 Purchased Kodak bonds for $15,300. December 31 Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000. Year 3 February 27 Purchased Microsoft bonds for $160,800. June 21 Sold all of the Sony notes for $57,600. June 30 Purchased Black & Decker bonds for $50,400. August 3 Sold all of the Sara…

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Answer 2

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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 9, Problem 1WC

To determine

Write a short note to the client explaining the difference between a liability of an unknown amount and a contingent liability and also make suggestion the manner by which the particular situation must be accounted.

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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 9, Problem 1WC

To determine

Write a short note to the client explaining the difference between a liability of an unknown amount and a contingent liability and also make suggestion the manner by which the particular situation must be accounted.

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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 9, Problem 1WC

To determine

Write a short note to the client explaining the difference between a liability of an unknown amount and a contingent liability and also make suggestion the manner by which the particular situation must be accounted.

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Answer 5

Chapter 9, Problem 1WC

To determine

Write a short note to the client explaining the difference between a liability of an unknown amount and a contingent liability and also make suggestion the manner by which the particular situation must be accounted.

Answer 6

Chapter 9, Problem 1WC

To determine

Write a short note to the client explaining the difference between a liability of an unknown amount and a contingent liability and also make suggestion the manner by which the particular situation must be accounted.

Answer 7

Chapter 9, Problem 1WC

To determine

Write a short note to the client explaining the difference between a liability of an unknown amount and a contingent liability and also make suggestion the manner by which the particular situation must be accounted.

Answer 8

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Answer 9

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Answer 11

Ch. 9.A - Calculate employee payroll (Learning Objective 8)...Ch. 9.A - Calculate net pay (Learning Objective 8) 5-10 min....Ch. 9.A - Employer payroll costs (Learning Objective 8) 5-10...Ch. 9.A - Prob. 4AE Ch. 9.A - Prob. 5AE Ch. 9.A - Prob. 6AE Ch. 9.A - Prob. 7BE Ch. 9.A - Prob. 8BE Ch. 9.A - Calculating gross and net pay (Learning Objective...Ch. 9.A - Calculating gross and net pay (Learning Objective...

Write a short note to the client explaining the difference between a liability of an unknown amount and a contingent liability and also make suggestion the manner by which the particular situation must be accounted.

Solution Summary: The author explains the difference between a contingent liability and an unknown liability, and suggests the manner by which the particular situation must be accounted for.

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Write a short note to the client explaining the difference between a liability of an unknown amount and a contingent liability and also make suggestion the manner by which the particular situation must be accounted.

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