Loose Leaf for Financial Accounting: Information for Decisions
9th Edition
ISBN: 9781260158762
Author: John J Wild
Publisher: McGraw-Hill Education
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A bookkeeping account that is charged with actual or expected losses from a given exposure is an example of
When the amount of a contingent liability cannot be reasonably estimated but its likelihood is probable, the company should:
Multiple Choice
include a description in the notes to the financial statements.
record the amount of the liability times the probability of its occurrence.
exclude the information about the contingent liability from its financial statements and footnotes.
record the amount of the liability as a long-term liability on the balance sheet.
. In determining the amount of a provision, a company using IFRS should generally measure:
a. using the midpoint of the range between the lowest possible loss and the highest possible loss.
b. using the minimum amount of the loss in the range.
c. using the best estimate of the amount of the loss expected to occur.
d. using the maximum amount of the loss in the range.
Chapter 9 Solutions
Loose Leaf for Financial Accounting: Information for Decisions
Ch. 9 - Prob. 1DQCh. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - What is the combined amount (in percent) of the...Ch. 9 - What is the current Medicare tax rate? This rate...Ch. 9 - Prob. 6DQCh. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Why are warranty liabilities usually recognized on...Ch. 9 - Prob. 10DQ
Ch. 9 - Prob. 11DQCh. 9 - Prob. 12DQCh. 9 - Prob. 13DQCh. 9 - Prob. 14DQCh. 9 - Prob. 15DQCh. 9 - Prob. 16DQCh. 9 - Prob. 1QSCh. 9 - Prob. 2QSCh. 9 - Ticketsales, Inc., receives $5,000,000 cash in...Ch. 9 - Prob. 4QSCh. 9 - Prob. 5QSCh. 9 - Prob. 6QSCh. 9 - Prob. 7QSCh. 9 - Prob. 8QSCh. 9 - Prob. 9QSCh. 9 - Prob. 10QSCh. 9 - Prob. 11QSCh. 9 - Prob. 12QSCh. 9 - Sera Corporation has made and recorded its...Ch. 9 - Prob. 15QSCh. 9 - Prob. 1ECh. 9 - Prepare any necessary entries at December 31 for...Ch. 9 - Prob. 3ECh. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Hitzu Co. sold a copier costing $4,800 with a...Ch. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 18ECh. 9 - Prob. 19ECh. 9 - Prob. 1PSACh. 9 - Prob. 2PSACh. 9 - Paloma Co. has four employees. FICA Social...Ch. 9 - Prob. 4PSACh. 9 - Shown here are condensed income statements for two...Ch. 9 - Prob. 6PSACh. 9 - Warner Co. entered into the following transaction...Ch. 9 - Prob. 2PSBCh. 9 - Fishing Guides Co. has four employees. FICA Social...Ch. 9 - On November10, 2017, Lee Co. began operations by...Ch. 9 - Shown here are condensed income statements for two...Ch. 9 - Prob. 6PSBCh. 9 - Prob. 9SPCh. 9 - Prob. 1GLPCh. 9 - Prob. 1FSACh. 9 - Prob. 2FSACh. 9 - Prob. 3FSACh. 9 - Prob. 1BTNCh. 9 - Prob. 2BTNCh. 9 - Assume that your team is in business and you must...Ch. 9 - Prob. 5BTN
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- Which of the following contingencies is usually accrued? A risk of loss from fire B discovery of possible mineral reserves on company property C bad debts D expected proceeds from insurance settlementarrow_forwardWhich of the following is a characteristic of a current liability but not a long-term liability? a. Liquidation is reasonably expected to require use of existing resources classified as current assets or create other current liabilities. b. Unavoidable obligation. c. Transaction or other event creating the liability has already occurred. d. Present obligation that entails settlement by probable future transfer or use of cash, goods, or services.arrow_forwardManagement can estimate the amount of loss that will occur due to litigation against the company. If the likelihood of loss is reasonably likely, a contingent liability should be: A) Disclosed but not reported B) Neither disclosed or reported as a liability C) Disclosed and reported as a liability D) Reported as a liability but not disclosedarrow_forward
- When is a contingent liability is reported? Select one: when the likelihood of the loss is reasonably possible and a range of outcomes can be estimated when the future events will possibly occur, and the amount of the loss is material when the amount of the loss can be reasonably estimated when the likelihood of the loss is probable and the amount of the loss can be reasonably estimatedarrow_forwardWhat controversy relates to the accounting for net operating loss carryforwards? What is your opinion on the matter?arrow_forwardThe realization principle underlies the accounting practices of depreciating plant assets and amortizing the cost of unexpired insurance policies. True Falsearrow_forward
- The following items represent various types of liabilities. Identify if the following independent situations should be (a) recorded in the financial statements, (b) disclosed in a footnote in the financial statements, or (c) neither. ______ 1. A manufacturing company is sued for alleged product liability. The company’s attorney does not feel that the suit will result in liability to the company, but a loss is possible. If adversely adjudicated, the liability would be material. ______ 2. Alpha has sold products to Sparkle Jewelers, a retailer that sold the products to customers. The manufacturer’s warranty offers replacement of the product if it is found to be defective within 90 days of the sale to the consumer. Historically, 0.06% of the products are returned for replacement. ______ 3. A customer has filed a lawsuit for a minor amount against Sparkle Jewelers. Sparkle’s attorneys have reviewed the case and have found that many similar cases have never been awarded to the plaintiff.arrow_forward22. Uncertainties such as natural disasters that could happen in the future: A. Are not contingent liabilities because they are future events not arising out of past transactions or events.B. Are contingent liabilities because they are future events arising from past transactions or events.C. Should be disclosed because of their usefulness to financial statements.D. Are estimated liabilities because the amounts are uncertainarrow_forwardDefine net operating loss.arrow_forward
- What is depreciation, how is it calculated and how does it relate to the matching principle of accounting? Are there any estimates in depreciation and what are they? Why is it better to use these estimates than to not depreciate at all? What would be the alternatives to depreciation and what kinds of problems do they present? Please think about where we report equipment and similar items on the financial statements.arrow_forwarddefine contingent liability and give an example. How would you management of a company distort a liability if they wish to report less liability in the financial statement.arrow_forwardWhich of the following statements is false?Select one:a. A contingent liability should be disclosed in the notes to the financial statements if there is a reasonable possibility that a loss (or expense) will occur.b. A contingent liability should be accrued if the loss is probable and the amount of the loss can be reasonably estimated.c. A contingent liability is a potential obligation that depends on the future outcome of past events.d. All contingent liabilities should be reported as liabilities on the financial statements, even those that are unlikely to occur.arrow_forward
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