There is substantial modification of terms of an old financial liability if the gain or loss on extinguishment is * a. At least 10% of the old liability b. Less than 10% of the old liability c. At least 10% of the new liability d. Less than 10% of the new liability

There is substantial modification of terms of an old financial liability if the gain or loss on extinguishment is * a. At least 10% of the old liability b. Less than 10% of the old liability c. At least 10% of the new liability d. Less than 10% of the new liability

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 1PB: Consider the following situations and determine (1) which type of liability should be recognized...

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Concept explainers

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.

Question

There is substantial modification of terms of an old financial liability if the gain or loss on extinguishment is *

a. At least 10% of the old liability
b. Less than 10% of the old liability
c. At least 10% of the new liability
d. Less than 10% of the new liability

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