Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 9, Problem 2C
Part (a)
To determine
Discuss the manner in which the two basic requirements for the accrual of a loss contingency relate to the given concepts.
Part (b)
To determine
Explain the accrual and type of disclosure that are necessary and the reason for the disclosure is appropriate for each situation.
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Part a. The two basic requirements for the accrual of a loss contingency are supported by several basic concepts of accounting.Three of these concepts are the period of time assumption the recognition principle and the qualitative characteristic of verifiability.
Required:
Discuss how the two basic requirements for the accrual of a loss contingency relate to the tree concepts mentioned above.
Part b. The following three independent sets of facts relate to (1) the possible accrual or (2) the possible disclosure by other means of a loss contingency
Situation I
A company offers a 1 year assurance type warranty for the product that it manufactures. A history of warranty claims has been compiled and the probable amount of claims related to slaes for a given period can be determined.
Situation II
Subsequent to the date of a set financial staements, but prior to the issuance of the financial statements, a company enters into a contract that will probably result in a significant loss to the…
Part a. The two basic requirements for the accrual of a loss contingency are supported by several basic concepts of accounting. Three of these concepts are the period of time assumption, the recognition principle, and the qualitative characteristic of verifiability.
Required:
Discuss how the two basic requirements for the accrual of a loss contingency relate to the three concepts mentioned above.
Part b. The following three independent sets of facts relate to (1) the possible accrual or (2) the possible disclosure by other means of a loss contingency.
Situation I
A company offers a 1-year assurance-type warranty for the product that it manufactures. A history of warranty claims has been compiled and the probable amount of claims related to sales for a given period can be determined.
Situation II
Subsequent to the date of a set of financial statements, but prior to the issuance of the financial statements, a company enters into a contract that will probably result in a significant…
FAR- Conceptual Framework
Kindly help me answer the following:
11. Which is an implication of the going concern assumption? *
a. Depreciation and amortization policies are justifiable and appropriate.
b. The current and noncurrent classification of assets and liabilities is justifiable and significant.
c. All of these are an implication of going concern.
d. The historical cost principle is credible.
12. The concept of accounting entity is applicable *
a. Only to business organisations
b. Only to the economic aspects of business organizations
c. Only to the legal aspects of business organizations
d. Whenever accounting is involved
13. The overall objective of financial reporting is to provide information *
a. That allows owners to assess management performance.
b. About assets, liabilities and equity of an entity.
c. That is useful for decision making
d. About financial…
Chapter 9 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 9 - Prob. 1GICh. 9 - Prob. 2GICh. 9 - List the three characteristics of a liability....Ch. 9 - Prob. 4GICh. 9 - Prob. 5GICh. 9 - Prob. 6GICh. 9 - Prob. 7GICh. 9 - Prob. 8GICh. 9 - How does materiality affect the accounting for...Ch. 9 - Distinguish between an interest-bearing note and a...
Ch. 9 - Prob. 11GICh. 9 - How should long-term debt that is callable by a...Ch. 9 - Prob. 13GICh. 9 - Prob. 14GICh. 9 - Prob. 15GICh. 9 - Prob. 16GICh. 9 - Prob. 17GICh. 9 - Prob. 18GICh. 9 - Prob. 19GICh. 9 - Prob. 20GICh. 9 - Prob. 21GICh. 9 - Prob. 22GICh. 9 - Prob. 23GICh. 9 - Prob. 24GICh. 9 - Prob. 25GICh. 9 - Prob. 26GICh. 9 - Prob. 27GICh. 9 - Prob. 28GICh. 9 - The balance in Ashwood Companys accounts payable...Ch. 9 - On September 1, 2019, a company borrowed cash and...Ch. 9 - When a company receives a deposit from a customer...Ch. 9 - Bronson Apparel Inc. operates a retail store and...Ch. 9 - Prob. 5MCCh. 9 - Prob. 6MCCh. 9 - Prob. 7MCCh. 9 - Prob. 8MCCh. 9 - Prob. 9MCCh. 9 - Prob. 10MCCh. 9 - Rescue Sequences LLC purchased inventory by...Ch. 9 - Use the same information in RE9-1 except that the...Ch. 9 - Cee Co.s fiscal year begins April 1. At the...Ch. 9 - Prob. 4RECh. 9 - Prob. 5RECh. 9 - Smith Company is required to charge customers an...Ch. 9 - Wallace Corporation summarizes the following...Ch. 9 - Borat Company gives annual bonuses after the end...Ch. 9 - Prob. 9RECh. 9 - Prob. 10RECh. 9 - After years of experience, Dilcort Company...Ch. 9 - Prob. 1ECh. 9 - Notes Payable On December 1, 2019, Insto Photo...Ch. 9 - Non-Interest-Bearing Notes Payable On November 16,...Ch. 9 - Discounting of Notes Payable On October 30, 2019,...Ch. 9 - Disclosure of Debt On May 1, 2019, Ramden Company...Ch. 9 - Short-Term Debt Expected to Be Refinanced On...Ch. 9 - Short-Term Debt Expected to Be Refinanced On...Ch. 9 - Refundable Deposits Party Warehouse Inc. rents a...Ch. 9 - Prob. 9ECh. 9 - Property Taxes Family Practice Associates has an...Ch. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 17ECh. 9 - Prob. 18ECh. 9 - Prob. 19ECh. 9 - Prob. 20ECh. 9 - Cash Rebates On January 1, 2020, Fro-Yo Inc. began...Ch. 9 - Prob. 22ECh. 9 - Prob. 1PCh. 9 - Notes Payable and Effective Interest On November...Ch. 9 - Trade Note Transactions Adjusto Corporation (which...Ch. 9 - Prob. 4PCh. 9 - Short-Term Debt Expected to Be Refinanced On...Ch. 9 - Non-Interest-Bearing Note Payable: Present Value...Ch. 9 - Prob. 7PCh. 9 - Prob. 8PCh. 9 - Payroll and Payroll Taxes Bailey Dry Cleaners has...Ch. 9 - Bonus Obligation and Income Tax Expense James...Ch. 9 - Prob. 11PCh. 9 - Contingencies Fallon Company, a toy manufacturer...Ch. 9 - Prob. 13PCh. 9 - Assurance-Type Warranty Clean-All Inc. sells...Ch. 9 - Prob. 15PCh. 9 - Premium Obligation Yummy Cereal Company is...Ch. 9 - Comprehensive Selected transactions of Lizard Lick...Ch. 9 - Comprehensive Selected transactions of Shadrach...Ch. 9 - Prob. 1CCh. 9 - Prob. 2CCh. 9 - Prob. 3CCh. 9 - Pending Damage Suit Disclosure On December 15,...Ch. 9 - Various Contingency Issues Skinner Company has the...Ch. 9 - Prob. 6CCh. 9 - Prob. 7CCh. 9 - Prob. 8CCh. 9 - Prob. 10C
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- Loss contingencies are usually recognized in the income statements of the period when a. realized b.the amount can be reasonably estimated c. occurrence is reasonably possible and the amount can be reasonable estimated d. occurrence is probable and the amount can be reasonably estimated This question is required.arrow_forwardPlease explain the four measurement bases and discuss how they affect the fundamental and enhancing qualitative characteristics of the information presented within the financial statements as they relate to the liabilities?arrow_forwardDemonstrate the appropriate accounting treatment for contingencies, includingunasserted claims and assessments.arrow_forward
- describe diff erent types of assets and liabilities and the measurement bases of eacharrow_forwardWhich among the following suits best for Unearned revenue? a. Liability b. Expense c. Revenue d. Assetarrow_forwardWhich of the following sets includes only accounting assumptions and conventions? a. timeliness, prudence, historical cost, and neutrality b. matching, comparability, period of timem and reliability c. monetary unit, going concern, relevance, and materiality d. monetary unit, entity, going concern, and realization-recognitionarrow_forward
- Differentiate between the ‘definition of assets’ and ‘recognition criteria of assets’ provided in the conceptual framework of accountingarrow_forwardc. Distinguish between financial assets and real assets for each of the followingcharacteristics. i. Divisibility ii. Marketability iii. Holding period iv. Information availabilityarrow_forwardWhich one of the following disclousures is required by generally accepted accounting principle? a. Depreciation expense for each major class of asset b. Balances of major classes of depreciable assets, by nature or function c. Accumulated depreciation on each depreciable asset d. An explanation of why the depreciation method used was selected by managementarrow_forward
- Multiple choice: 1. It is a present obligation that has resulted from past events and has the potential to cause a transfer of an economic resource in its settlement. A. income B. asset C. equity D. liability 2. The usefulness of information is assessed in terms of its A. qualitative characteristics. B. timeliness C. verifiability D. sizearrow_forwardc. Distinguish between financial assets and real assets for each of the following characteristics. i. Divisibility ii. Marketability iii. Holding period iv. Information availabilityarrow_forwardOutline the accounting treatment of financial asset impairments according to IFRS 9 Financial Instruments and discuss the potential benefits and drawbacks of this approach.arrow_forward
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