The following legal claims exist for a company. Identify the accounting treatment for each claim as either(a) a liability that is recorded or (b) an item described in notes to its financial statements. The company faces a probable loss on a pending lawsuit; the amount is not reasonably estimable.

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A: Debit and credit: The transactions of the company will affect the account balances either by…

Q: 3. The following stateme il, except. An entity shall prepare all its financial statements using the…

A: -> As per IAS 1 if the information is immaterial it is not needed to provide a disclosure. So…

Q: How is the accounting treatment of an event that occurred on the date before the report was…

A: Subsequent events are events occurring after balance sheet but before the issue of financial…

Q: If a client fails to present to the external auditor a concrete plan or sufficient supporting…

A: The correct option is: Option B (S2 and S3 are true)

Q: If a company registered with the SEC justifies a change in accounting method as preferable under the…

A: Securities Exchange Commission (SEC): This is the government agency governs the working of financial…

Q: Define each when dealing with financial responsibility: Accounting and financial reporting matters…

A: Financial Responsibility:-It is the responsibility of one to manage the money so that it will be in…

Q: Which of the following users of accounting verifies accounting information to check the Tax…

A: Regulatory agencies check whether the company is complying with all the tax compliance of the…

Q: Which one of the following unsecured liabilities has the highest priority when an insolvent company…

A: Insolvency refers to the company being unable to pay its all its debts or when the liabilities of a…

Q: Choose the correct. If the reorganization value of a company emerging from bankruptcy is larger than…

A: Answer:   Option c.

Q: For purposes of the qualified business income (QBI) deduction, qualified business income does not…

A: Qualified Business Income deduction refers to that income that is related to trade and business. In…

Q: IAS 37, Provisions, Contingent Liabilities and Contingent Assets was issued in 1998. The  Standard…

A: The objective of IAS 37 is to ensure proper recognition and disclosure of provisions, contingent…

Q: All lawsuits in which a company has been named a defendant should be either disclosed in the…

A: Contingent liability should be recorded in the income statement when there is a probability of loss…

Q: Corporations disclose restrictions of retained earnings on the balance sheet as a deduction from…

A: Restricted retained earnings refers to that amount of a company's retained earnings that are not…

Q: Dell recorded the exclusivity payments as an offset or reduction to its operating expenses. What…

A: Management assertions: The implicit or explicit assertions of the person in charge of compiling the…

Q: In comparison to the burden of proof required of plaintiffs in civil lawsuits against independent…

A: In comparison to the burden of proof required of plaintiffs in civil lawsuits against independent…

Q: Which of the following does not constitute fair presentation and compliance with IFRS? A) an entity…

A: When financial statements are devoid of substantial misstatements and adequately portray an entity's…

Q: An attestation engagement is one in which a CPA is engaged to: A. Issue a written communication…

A: CPA is certified public accountant who is experienced, educated and have license. Attestation means…

Q: A company’s management believes that substantial doubt exists that the company can meet its…

A:

Q: does a cancellation of a service affect the companys balance sheet or book value?

A: Cancellation of service affect the company's balance sheet or book value : Some of the contracts…

Q: The accounting assumption or principle of is being violated if a company that is a party to major…

A: Solution: The accounting assumption or principal of Full disclosure is being violated if a company…

Q: It is necessary to account for company transactions separately from personal transactions of the…

A: Accounting Principles:   The term "accounting principles" refers to the standards, guidelines or…

Q: What are possible plans that management of a troubled business might create to mitigate substantial…

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A:

Q: e ‘true and fair view’ concept is one of two competing but not mutually exclusive legal or…

A: True and fair view in auditing means the financial statements are free from material misstatements…

Q: Which of the following may not be an effect of VAT on the accounting records of a company?   i. The…

A: VAT refers to indirect tax imposed on the sale and purchase of goods and services.

Q: The filing of a 10-K and an annual report are required by the Securities and Exchange Commission.…

A: Securities exchange commission is an independent body which is made to protect the investors…

Q: Under which circumnstances should a company disclose contingent liabilites in the footnotes of the…

A: Note: The answer for question first is given above. For remaining, please post separately. Thanks!…

Q: Which of the following services is not an example of a nonassurance service? OA The auditor examines…

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Q: A certain contingent liability was evaluated at year-end, and considered to have a reasonable…

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Q: The following does not constitute fair presentation and compliance with IFRS: a)  an entity rectify…

A: IFRS refers to International Financial Reporting Standards. It is a set of rules or guidelines which…

Q: If it is discovered that an extraordinary repair in the previous year was incorrectly debited to…

A:

Q: hich of the following may not be an effect of VAT on the accounting records of a company?   The…

A: VAT is the value added tax which is applied to all sales of services and imports, as well as to the…

Q: According to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, an entity must…

A: Accounting policies are the measures, principles or rules which are applied by the entities so that…

Q: What does it mean for a company to be a legal person and what does it mean for owners of a company…

A: A company is an association of people that has its own legal existence and is incorporated with a…

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A: Under the Corporations Act, an auditor is obligated to report certain matters including certain…

Q: When creditors who relied on an entity’s audited financial statements suffer monetary lossesafter a…

A: Audited Financial statements are those statements that include the auditor's independent reports and…

Q: The accounting assumption or principle of __________________ is being violated if a company that is…

A: The Full Disclosure Principle states that all relevant and necessary information must be included…

Q: List the reporting actions that accountants should consider before a troubled company declares…

A: Bankruptcy is a term used I law for a person or an organization that is not in a position to pay its…

Q: Which of the following statements is false? A) In bankruptcy, management is given the opportunity…

A:

Q: Darren Company becomes aware of a lawsuit after the date of the financial statements, but before…

A: A liability whose occurrence is dependent on the occurrence of a future event is considered a…

Q: A Corporation's accounting statement of affairs shows a recovery percentage of 120%. The rate of…

A: Creditors are the stakeholder from which the company has borrowed money and intend to pay interest…

Q: At the time of corporate liquidation, which of the following unsecured claims with priority shall be…

A: At the time when a corporation is liquidated, its creditors are paid in a specified order, as…

Q: An entity has made an error in the balance sheet. During the current year, a bond has been…

A: it is important that financial statement in order to make investment decisions by the investors. the…

Q: When a company acquires an affiliated company’s debt instruments from a third party, how is the gain…

A:

Q: When an entity has the benefit of particular service but it has not received the bill (invoice) to…

A: Prepayment: When payment is made in advance before receiving goods or services, then the payment is…

Q: The financial report has been prepared on the basis of historical cost, except for the revaluation…

A: The financial statements are prepared mostly on the basis of historical cost basis for the assets or…

Q: This is effected by those Who do not have access to the detailed accounting records of the concern.

A: Horizonal analysis is the analysis that shows the comparison of the financial statement of various…

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.