Contingent liability is a likely obligation dependent on future events arising out of past transactions, such as a liability on account of a lawsuit depending on the outcome of the lawsuit. Accounting for contingent liability is based on the estimated future obligation if the event occurs. The entry to record the contingent liability based on the given separate situations.

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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 17E

To determine

Concept Introduction: Contingent liability is a likely obligation dependent on future events arising out of past transactions, such as a liability on account of a lawsuit depending on the outcome of the lawsuit. Accounting for contingent liability is based on the estimated future obligation if the event occurs. The entry to record the contingent liability based on the given separate situations.

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2. Which is a valid statement regarding recognition of liabilities? * a. A non-interest bearing note is initially recognized at face value. b. A provision should not be O recognized for future operating losses. c. For accumulating compensated absences, an entity should recognize the expense and related liability during the period the absences are incurred by the employees. d. The estimated future costs of supplying awards for customer loyalty program shall be recognized as an expense in the period the award credits are availed of by customers.

I. Write "T" if the statement is True and write "F" if otherwise 1. A zero-interest-bearing note payable that is issued at a discount will not result in any interest expense being recognized. 2. Magazine subscriptions and airline ticket sales both result in unearned revenues. 3. A short-term obligation can be excluded from current liabilities if the company intends to refinance it on a long-term basis. 4. Many companies do not segregate the sales tax collected and the amount of the sale at the time of the sale. 5. A company must accrue a liability for sick pay that accumulates but does not vest. 6. Companies report the amount of social security taxes withheld from employees as well as the companies' matching portion as current liabilities until they are remitted. 7. Accumulated rights exist when an employer has an obligation to make payment to an employee even after terminating his employment. 8. Companies should recognize the expense and related liability for compensated absences in…

An item that is not a contingent liability is: A. premium offer to customers for labels or box tops. B. accommodation endorsement on customer note. C. additional compensation that may be payable on a dispute now being arbitrated. D. note receivable discounted. A loss contingency that should be accrued is: A. note receivable discounted. B. pending lawsuit C. tax in dispute D. estimated claim under a service warranty on new products sold.

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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 17E

To determine

Concept Introduction: Contingent liability is a likely obligation dependent on future events arising out of past transactions, such as a liability on account of a lawsuit depending on the outcome of the lawsuit. Accounting for contingent liability is based on the estimated future obligation if the event occurs. The entry to record the contingent liability based on the given separate situations.

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Answer 3

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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 17E

To determine

Concept Introduction: Contingent liability is a likely obligation dependent on future events arising out of past transactions, such as a liability on account of a lawsuit depending on the outcome of the lawsuit. Accounting for contingent liability is based on the estimated future obligation if the event occurs. The entry to record the contingent liability based on the given separate situations.

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Answer 4

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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 17E

To determine