Which of the following contingent liabilities would require a company to record a note to the financial statements? The liability is possible and is esti- mated to be $35,000. The liability is probable and cannot be reasonably estimated. The liability is probable and estimat- ed to be $40,000. The liability is remote and cannot be estimated. The liability is remote and estimated to be $15,000. The liability is possible and cannot be reasonably estimated.

In 2-3 paragraphs complete the following: Define gain contingency. Describe the accounting requirements for a gain contingency. Define contingency. What exactly is the company uncertain about—whether a future event will take place and result in a liability or whether a future event will take place that will confirm that a liability exists from an event that has already taken place?

Which of the following statements about "avoidable interest" is false? it is computed only on self-constructed assets. it is computed using a weighted-average interest rate on debt and equity financing. it increases assets on the balance sheet. O it is an approximation of the interest expense the firm would have incurred if it financed all construction through debt.

Warranty liability is an estimate based on past warranty claims. How might a company determine how much to accrue for warranty? Why might it change the accrual?

A company can have a liability even if the amount of the obligation is unknown. O True O False

Why might some liabilities not be reported on the balance sheet? Why would a company look to have some liabilities not reported on its balance sheet?

Vikrambahi

Accounting for liabilities involves recording and managing obligations a company owes to external parties. Liabilities are classified based on their nature and timing of settlement. Common types include:   Current Liabilities: Debts or obligations expected to be settled within one year or the operating cycle, whichever is longer. Examples include accounts payable, accrued expenses, and short-term loans.   Long-Term Liabilities: Obligations not due within the next operating cycle or one year. Examples include long-term loans, bonds payable, and lease obligations.   Contingent Liabilities: Potential obligations that depend on a future event, such as lawsuits or warranties. They are disclosed in the footnotes of financial statements unless the likelihood of payment is remote.   Deferred Revenue: Payments received in advance for goods or services to be provided in the future. They are recorded as liabilities until the revenue recognition criteria are met.   Accrued Liabilities: Expenses…

Star Company has a contingent liability that has a likelihood of actual occurrence that is classified as probable. Also, the amount of the liability can be reasonably estimated. Under these circumstances, Star is required to Multiple Choice O recognize a liability only. disclose but not recognize the liability or the expense. recognize a liability and an expense in its financial statements. recognize an expense only.