Contingent liability : It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future. To Explain : The accounting for contingent liabilities.

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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 11, Problem 11.1CTCA

To determine

Contingent liability: It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future.

To Explain: The accounting for contingent liabilities.

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Sarter Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. Beginning inventory Ending inventory Finished goods (units) 70,000 20,000 Raw material (grams) 50,000 60,000 Each unit of finished goods requires 3 grams of raw material. The company plans to sell 880,000 units during the year. How much of the raw material should the company purchase during the year? a. 2,550,000 grams b. 2,490,000 grams c. 2,480,000 grams d. 2,500,000 grams

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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 11, Problem 11.1CTCA

To determine

Contingent liability: It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future.

To Explain: The accounting for contingent liabilities.

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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 11, Problem 11.1CTCA

To determine

Contingent liability: It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future.

To Explain: The accounting for contingent liabilities.

Expert Solution & Answer

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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 11, Problem 11.1CTCA

To determine

Contingent liability: It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future.

To Explain: The accounting for contingent liabilities.

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Answer 5

Chapter 11, Problem 11.1CTCA

To determine

Contingent liability: It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future.

To Explain: The accounting for contingent liabilities.

Answer 6

Chapter 11, Problem 11.1CTCA

To determine

Contingent liability: It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future.

To Explain: The accounting for contingent liabilities.

Answer 7

Chapter 11, Problem 11.1CTCA

To determine

Contingent liability: It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future.

To Explain: The accounting for contingent liabilities.

Answer 8

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Answer 9

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Answer 11

Ch. 11 - Prob. 1QC Ch. 11 - On January 1, 2016, a business borrowed 18,000 on...Ch. 11 - A company sells 180,000 (selling price) of goods...Ch. 11 - Prob. 4QC Ch. 11 - Prob. 5QC Ch. 11 - Prob. 6QC Ch. 11 - Prob. 7QC Ch. 11 - Vega Company expects to pay a 4% bonus on net...Ch. 11 - Prob. 9QC Ch. 11 - Prob. 10QC

Contingent liability : It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future. To Explain : The accounting for contingent liabilities.

Solution Summary: The author explains the accounting for contingent liabilities based on the likelihoods of the event occurring in the future.

Concept explainers

Contingent liability: It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future.

To Explain: The accounting for contingent liabilities.

Want to see the full answer?

Chapter 11 Solutions

Contingent liability : It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future. To Explain : The accounting for contingent liabilities.

Solution Summary: The author explains the accounting for contingent liabilities based on the likelihoods of the event occurring in the future.

Concept explainers

Contingent liability: It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future. To Explain: The accounting for contingent liabilities.

Want to see the full answer?

Chapter 11 Solutions

Contingent liability: It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future.

To Explain: The accounting for contingent liabilities.