Provide the conditions that must be satisfied for an estimated loss from a loss contingency to be accrued by the charge to income.

Question

Want to see the full answer?

Answer 1

Question

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 3C

1.

To determine

Provide the conditions that must be satisfied for an estimated loss from a loss contingency to be accrued by the charge to income.

2.

To determine

Identify when the disclosure is required and also specify the type of disclosure that should be made for an estimated loss from a loss contingency that needed to be accrued by a charge to income.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Which of the following statements about Loss Contingencies is TRUE? According to the practice of accounting conservatism, contingency losses do not have to be accrued until they are confirmed, while contingency gains have to be recorded when the event confirming their receipt is probable. Remote Losses do not require disclosure. According to the U.S. GAAP, a loss contingency must be accrued by a charge to income if any of the two conditions is met: 1) it is probable that an asset has been impaired, or a liability has been incurred at the date of the financial statements; 2) the amount of the loss can be reasonably estimated. If a loss is probable but cannot be estimated, it shall not be disclosed in the financial statements.

What is a contingency? Why are contingencies important to users of financial statements? What are the criteria for recording contingencies? Should companies record a liability for threatened litigation? Why or why not?

1. Define and briefly discuss a loss contingency. 2. What are the similarities and differences of the accounting treatment and financial statement reporting of a loss contingency between U.S. GAAP and IFRS? 3. As a manager, would you like to report a debt as a current or non-current liability if you had a choice? Explain. And under what kind of circumstances could a short-term obligation be reported as a non-current liability?

Answer 2

Question

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 3C

1.

To determine

Provide the conditions that must be satisfied for an estimated loss from a loss contingency to be accrued by the charge to income.

2.

To determine

Identify when the disclosure is required and also specify the type of disclosure that should be made for an estimated loss from a loss contingency that needed to be accrued by a charge to income.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

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 3C

1.

To determine

Provide the conditions that must be satisfied for an estimated loss from a loss contingency to be accrued by the charge to income.

2.

To determine

Identify when the disclosure is required and also specify the type of disclosure that should be made for an estimated loss from a loss contingency that needed to be accrued by a charge to income.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

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 3C

1.

To determine

Provide the conditions that must be satisfied for an estimated loss from a loss contingency to be accrued by the charge to income.

2.

To determine

Identify when the disclosure is required and also specify the type of disclosure that should be made for an estimated loss from a loss contingency that needed to be accrued by a charge to income.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 9, Problem 3C

1.

To determine

Provide the conditions that must be satisfied for an estimated loss from a loss contingency to be accrued by the charge to income.

2.

To determine

Identify when the disclosure is required and also specify the type of disclosure that should be made for an estimated loss from a loss contingency that needed to be accrued by a charge to income.

Answer 6

Chapter 9, Problem 3C

1.

To determine

Provide the conditions that must be satisfied for an estimated loss from a loss contingency to be accrued by the charge to income.

Answer 7

Chapter 9, Problem 3C

1.

To determine

Provide the conditions that must be satisfied for an estimated loss from a loss contingency to be accrued by the charge to income.

Answer 8

2.

To determine

Identify when the disclosure is required and also specify the type of disclosure that should be made for an estimated loss from a loss contingency that needed to be accrued by a charge to income.

Answer 9

2.

To determine

Identify when the disclosure is required and also specify the type of disclosure that should be made for an estimated loss from a loss contingency that needed to be accrued by a charge to income.

Answer 10

Expert Solution & Answer

Answer 11

Expert Solution & Answer

Answer 12

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 13

Ch. 9 - Prob. 1GI Ch. 9 - Prob. 2GI Ch. 9 - List the three characteristics of a liability....Ch. 9 - Prob. 4GI Ch. 9 - Prob. 5GI Ch. 9 - Prob. 6GI Ch. 9 - Prob. 7GI Ch. 9 - Prob. 8GI Ch. 9 - How does materiality affect the accounting for...Ch. 9 - Distinguish between an interest-bearing note and a...

Provide the conditions that must be satisfied for an estimated loss from a loss contingency to be accrued by the charge to income.

Solution Summary: The author explains the conditions that must be satisfied for an estimated loss from a loss contingency to be accrued by the charge to income.

Concept explainers

Provide the conditions that must be satisfied for an estimated loss from a loss contingency to be accrued by the charge to income.

Identify when the disclosure is required and also specify the type of disclosure that should be made for an estimated loss from a loss contingency that needed to be accrued by a charge to income.

Want to see the full answer?

Chapter 9 Solutions