Liabilities: Liabilities are debt and obligations of a business. These are the claims against the resources that a business owes to outsiders of the company. Liabilities may be Current liabilities, and Long-term liabilities. Examples: Creditors, Bills payable, Bank overdraft, Salaries and wages payable, and Notes payable. Warranty: It is an agreement made by the company to provide guarantee against the defects in the products. 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 journalize : The liabilities transactions.

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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 11.33BP

1.

To determine

Liabilities: Liabilities are debt and obligations of a business. These are the claims against the resources that a business owes to outsiders of the company. Liabilities may be Current liabilities, and Long-term liabilities. Examples: Creditors, Bills payable, Bank overdraft, Salaries and wages payable, and Notes payable.

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

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 journalize: The liabilities transactions.

2.

To determine

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

To prepare: T-account of Estimated Warranty Payable.

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For each of the following situations, indicate the liability amount, if any, which is reported on the balance sheet of Hirst Inc. at December 31, 2015.a. Hirst owes $110,000 at year end 2015 for its inventory purchases.b. Hirst agrees to purchase a $28,000 drill press in January 2016.c. During November & December 2015, Hirst sold products to a firm with a 90 day warranty against product failure. Estimate 2016 costs of honoring the warranty are $2,200. d. Hirst provided a profit-sharing bonus for its executives equal to 5% of its reported pre-tax annual income. The estimated pretax income for 2015-is $500,00. Bonuses are not paid until January of the following year.

41. The following transaction relate to Tool Company’s contingencies. The financial statements are dated December 31, 2023 and were issued on March 31, 2024. Tool’s products carry one –year warranty against manufacturer defects. Based on past experience, warranty costs are expected to be 4% of sales. Sales for 2023 were P2,000,000 and actual warranty cost incurred was P30,000. In December 2023, an NGO filed suit against Tool seeking penalties for violation of clean air laws. Tool’s counsel advised that is probable that the entity will lose the case and that the amount of penalty is P2,000,000. Appropriately, the entity recorded the liability. On January 15, 2024, Tools reached a settlement to pay P1,500,000 in penalty. Tools is the plaintiff in a P4,000,000 suit filed against a supplier. The attorney advised that it is probable that the entity will win the case and that the award is P2,500,000. On March 15, 2024, the court ruled in favor of Tools and received P2,000,000.…

41 Reported in the ledger of Mayumi Company On December 31, 2017, is a Patent account with a balance of P120,000, and accumulated amortization of P 60,000. The Patent is being amortized for its useful life of eight years. On July 1, 2018, Mayumi spent P 30,000 to defend the patent against an infringement suit. On January 1, 2019, with the rapid change in technology, the company determined that the patent will be of no value to the company and that a loss on patent obsolescence has to be recognized.How much is the loss on patent obsolescence?

Answer 2

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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 11.33BP

1.

To determine

Liabilities: Liabilities are debt and obligations of a business. These are the claims against the resources that a business owes to outsiders of the company. Liabilities may be Current liabilities, and Long-term liabilities. Examples: Creditors, Bills payable, Bank overdraft, Salaries and wages payable, and Notes payable.

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

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 journalize: The liabilities transactions.

2.

To determine

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

To prepare: T-account of Estimated Warranty Payable.

Expert Solution & Answer

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Answer 3

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 11.33BP

1.

To determine

Liabilities: Liabilities are debt and obligations of a business. These are the claims against the resources that a business owes to outsiders of the company. Liabilities may be Current liabilities, and Long-term liabilities. Examples: Creditors, Bills payable, Bank overdraft, Salaries and wages payable, and Notes payable.

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

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 journalize: The liabilities transactions.

2.

To determine

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

To prepare: T-account of Estimated Warranty Payable.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

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 11.33BP

1.

To determine

Liabilities: Liabilities are debt and obligations of a business. These are the claims against the resources that a business owes to outsiders of the company. Liabilities may be Current liabilities, and Long-term liabilities. Examples: Creditors, Bills payable, Bank overdraft, Salaries and wages payable, and Notes payable.

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

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 journalize: The liabilities transactions.

2.

To determine

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

To prepare: T-account of Estimated Warranty Payable.

Expert Solution & Answer

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Answer 5

Chapter 11, Problem 11.33BP

1.

To determine

Liabilities: Liabilities are debt and obligations of a business. These are the claims against the resources that a business owes to outsiders of the company. Liabilities may be Current liabilities, and Long-term liabilities. Examples: Creditors, Bills payable, Bank overdraft, Salaries and wages payable, and Notes payable.

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

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 journalize: The liabilities transactions.

2.

To determine

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

To prepare: T-account of Estimated Warranty Payable.

Answer 6

Chapter 11, Problem 11.33BP

1.

To determine

Liabilities: Liabilities are debt and obligations of a business. These are the claims against the resources that a business owes to outsiders of the company. Liabilities may be Current liabilities, and Long-term liabilities. Examples: Creditors, Bills payable, Bank overdraft, Salaries and wages payable, and Notes payable.

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

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 journalize: The liabilities transactions.

Answer 7

Chapter 11, Problem 11.33BP

1.

To determine

Liabilities: Liabilities are debt and obligations of a business. These are the claims against the resources that a business owes to outsiders of the company. Liabilities may be Current liabilities, and Long-term liabilities. Examples: Creditors, Bills payable, Bank overdraft, Salaries and wages payable, and Notes payable.

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

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 journalize: The liabilities transactions.

Answer 8

2.

To determine

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

To prepare: T-account of Estimated Warranty Payable.

Answer 9

2.

To determine

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

To prepare: T-account of Estimated Warranty Payable.

Answer 10

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Answer 11

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Answer 12

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Answer 13

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

Solution Summary: The author explains that a business owes liabilities to outsiders, such as creditors, bills, bank overdraft, salaries and wages, and Notes.

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

To prepare: T-account of Estimated Warranty Payable.

Want to see the full answer?

Chapter 11 Solutions

Solution Summary: The author explains that a business owes liabilities to outsiders, such as creditors, bills, bank overdraft, salaries and wages, and Notes.

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products. To prepare: T-account of Estimated Warranty Payable.

Want to see the full answer?

Chapter 11 Solutions

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

To prepare: T-account of Estimated Warranty Payable.