ABC Inc. has is being sued by a customer. The plaintiff (customer) claims $50,000 for product deficiencies. The controller discussed the claim with legal counsel and the lawyer notes that the company is likely to lose the suit with an estimated payout of $50,000. The controller has identified this as a contingent loss (liability) and has accrued it in the financial statements and prepared the note disclosure. The financial statement note disclosure states the following: "During the year, ABC Inc. received a claim for an alleged product deficiency. ABC Inc. is defending the action however legal advice at this time indicated that is likely the claim could result in a loss for ABC Inc." ABC Inc. reports under ASPE. Required: a) Provide the path to the appropriate reference in the Handbook assuming the entity follows ASPE. b) Indicate what is missing from the note disclosure, if anything, for ABC Inc.

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Q: On November 5, 2020, a ABC Corporation truck was in an accident with an auto driven by nel. ABC…

A:

Q: During 2021, Angela Inc. was sued by a competitor for P5,000,000 for infringement of a patent. Based…

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Q: On June 30, 2020, Duts discovered that it had been manufacturing a product illegally since this…

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Q: A Company trades in home appliances in Sohar. The Company is facing a claim for OMR. 50,000 from a…

A: Assets: It is a resource that will generate future benefits and revenue for the company. It include…

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Q: Class, Plaintiff GG Company convinced the court that JJ Company had engaged in antitrust actions…

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Q: On January 30, 2016, a suit was filed against Frazier Corporationunder the Environmental Protection…

A:

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Q: The separation pay received by John is considered as:

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A: a. Following are the journal entries for the situations: Formulation:

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Q: much provision should Rasin recognize on December 31, 2020?

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Q: amount should the current liability be presented in the statement of financial position?

A: Current liability is the amount of liability, the payment of which is due within a year.

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Q: On December 13, 2019, ABC Company was in an accident with an automobile driven by DEF. ABC received…

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Q: PC Inc., a competitor of Champion Incorporated, filed a lawsuit against Champion for $430,000.…

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Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.