A fitness club gives clients a free month after they have paid for eleven months. Approximately half of their clients remain with the club long enough to take advantage of this offer. Required: 1. Define the term “Liability”. Then explain whether the free month offer results in a liability for the fitness club. 2. Explain what makes a liability “current”. Then explain whether the free month offer results in a current liability for the fitness club. 3. Define the term “contingent liability”. Then explain whether the free month offer results in a contingent liability for the fitness club.
A fitness club gives clients a free month after they have paid for eleven months. Approximately half of their clients remain with the club long enough to take advantage of this offer. Required: 1. Define the term “Liability”. Then explain whether the free month offer results in a liability for the fitness club. 2. Explain what makes a liability “current”. Then explain whether the free month offer results in a current liability for the fitness club. 3. Define the term “contingent liability”. Then explain whether the free month offer results in a contingent liability for the fitness club.
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter11: Notes, Bonds, And Leases
Section: Chapter Questions
Problem 9Q
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A fitness club gives clients a free month after they have paid for eleven months.
Approximately half of their clients remain with the club long enough to take
advantage of this offer.
Required:
1. Define the term “Liability”. Then explain whether the free month offer results in
a liability for the fitness club.
2. Explain what makes a liability “current”. Then explain whether the free month
offer results in a current liability for the fitness club.
3. Define the term “
offer results in a contingent liability for the fitness club.
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