INTERMEDIATE ACCOUNTING <CUSTOM LL>
10th Edition
ISBN: 9781260887068
Author: SPICELAND
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 13, Problem 13.13BE
To determine
Contingent liability is one form of liability that arises based on a particular outcome of a specific event. They are possible obligation that might arise or might not arise based on the future events. It is otherwise called as probable liability or eventual liability. Following are examples of contingencies:
- Income tax disputes
- Discounted notes receivable
- Lawsuits
- Debt guarantees
- Failure to follow government regulations
To report: Contingent loss (liability)
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
prob 5
Problem No. 5
Use the following information to answer next five (5) questions:
The AACA Company is on a calendar year basis. The following data were found during your audit:
Goods costing P30,000 had been received, included in inventory, and recorded as a purchase. However, upon your inspection the goods were found to be defective and would be immediately returned.
Goods in transit shipped FOB destination by a supplier, in the amount of P100,000, had been excluded from the inventory, and further testing revealed that the purchase had been recorded.
Materials costing P240,000 and billed on December 30 at a selling price of P330,000, had been segregated in the warehouse for shipment to a customer. The materials had been excluded from inventory as a signed purchase order had been received from the customer. Terms, FOB destination.
Goods costing P70,000 was out on consignment with White Company. Since the monthly statement from White Company listed those materials as…
Questions Exercise 04.57 Algo (Conditional Probability)
5.
6.
7.
A company studied the number of lost-time accidents occurring at its Brownsville, Texas, plant. Historical records show that 7% of the employees suffered
lost-time accidents last year. Management belleves that a special safety program will reduce such accidents to 6% during the current year. In addition, it
estimates that 15% of employees who had lost-time accidents last year will experience a lost-time accident during the current year.
a. What percentage of the employees will experience lost-time accidents in both years (to 2 decimals)?
%
b. What percentage of the employees will suffer at least one lost-time accident over the two-year period (to 2 decimals)?
%
Hide Feedback
Incorrect
✔ Question 7 of 7
Hint(s) Check My Work
Exercise 5-12
The president of Normolle Mfg. Co. which manufactures only one product,
requests an analysis of the causes of the change in gross profit. An investigation
reveals the following:
Sales
Cost of Sales
Gross Profit
2020
Amount
P1,224,000
700,800
P523,200
Per Unit
P10.20
5.84
P4.36
2019
Amount
P1,000,000
600,000
P400,000
Per Unit
REQUIRED:
1. A detailed analysis of the causes for the change in gross profit graphically.
P10.00
6.00
P4.00
Chapter 13 Solutions
INTERMEDIATE ACCOUNTING <CUSTOM LL>
Ch. 13 - What are the essential characteristics of...Ch. 13 - Prob. 13.2QCh. 13 - Bronson Distributors owes a supplier 100,000 on...Ch. 13 - Bank loans often are arranged under existing lines...Ch. 13 - Prob. 13.5QCh. 13 - Prob. 13.6QCh. 13 - Salaries of 5,000 have been earned by employees by...Ch. 13 - Prob. 13.8QCh. 13 - Prob. 13.9QCh. 13 - Prob. 13.10Q
Ch. 13 - Prob. 13.11QCh. 13 - Prob. 13.12QCh. 13 - Long-term obligations usually are reclassified and...Ch. 13 - How do IFRS and U.S. GAAP differ with respect to...Ch. 13 - Prob. 13.15QCh. 13 - Prob. 13.16QCh. 13 - Prob. 13.17QCh. 13 - Prob. 13.18QCh. 13 - Suppose the analysis of a loss contingency...Ch. 13 - Prob. 13.20QCh. 13 - Distinguish between the accounting treatment of a...Ch. 13 - At December 31, the end of the reporting period,...Ch. 13 - After the end of the reporting period, a...Ch. 13 - Prob. 13.24QCh. 13 - Prob. 13.25QCh. 13 - Prob. 13.26QCh. 13 - Prob. 13.27QCh. 13 - Prob. 13.28QCh. 13 - Bank loan; accrued interest LO132 On October 1,...Ch. 13 - Non-interest-bearing note; accrued interest LO132...Ch. 13 - Determining accrued interest LO132 On July1,...Ch. 13 - Commercial paper LO132 Branch Corporation issued...Ch. 13 - Non-interest-bearing note; effective interest rate...Ch. 13 - Sales tax LO133 DuringDecember, Rainey Equipment...Ch. 13 - Prob. 13.12BECh. 13 - Prob. 13.13BECh. 13 - Contingency LO135, LO136 Skill Hardware is the...Ch. 13 - Contingency LO135, LO136 Bell International can...Ch. 13 - Prob. 13.16BECh. 13 - Prob. 13.17BECh. 13 - FASB codification research LO133, LO134, LO135...Ch. 13 - Current noncurrent classification of debt; Sprint...Ch. 13 - Prob. 13.12ECh. 13 - Prob. 13.14ECh. 13 - Extended warranties LO135, LO136 Carnes...Ch. 13 - Disclosures of liabilities Indicate (by letter)...Ch. 13 - Prob. 13.11PCh. 13 - Prob. 13.2DMPCh. 13 - Prob. 13.3DMPCh. 13 - Prob. 13.4DMPCh. 13 - Prob. 13.18DMPCh. 13 - Real World Case 1319 Contingencies LO135 Real...Ch. 13 - Prob. 1CCTCCh. 13 - Prob. 2CCTC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Prevention costs: Total prevention costs Appraisal costs Total appraisal costs Internal failure costs: Total internal failure costs External failure costs: Total external failure costs Total quality cost Florex Company Quality Cost Report Last Year Amount (in Percent of thousands) Sales 0 0 0 0 0.00 0.00 0.00 0.00 This Year Amount (in thousands) 0 0 0 0 Percent of Sales 0.00 0.00 0.00 0.00arrow_forwardExercise 6-6 (Algo) Performance obligations; customer option for additional goods or services; residual method [LO6-2, 6-4, 6-6] Clarks Inc., a shoe retailer, sells boots in different styles. In early November the company starts selling "SunBoots" to customers for $65 per pair. When a customer purchases a pair of SunBoots, Clarks also gives the customer a 30% discount coupon for any additional future purchases made in the next 30 days. Customers can't obtain the discount coupon otherwise. Clarks anticipates that approximately 20% of customers will utilize the coupon, and that on average those customers will purchase additional goods that normally sell for $100. Required: 1. How many performance obligations are in a contract to buy a pair of SunBoots? 2. Assume Clarks cannot estimate the standalone selling price of a pair of SunBoots sold without a coupon. Prepare a journal entry to record revenue for the sale of 1,000 pairs of SunBoots.arrow_forwardRequired information Exercise 10-36 & 10-37 (Algo) (LO 10-3, 4) Skip to question [The following information applies to the questions displayed below.] Hult Games buys electronic components for manufacturing from two suppliers, Milan Components and Dundee Parts. If the components are delivered late, the shipment to the customer is delayed. Delayed shipments lead to contractual penalties that call for Hult to reimburse a portion of the purchase price to the customer. During the past quarter, the purchasing and delivery data for the two suppliers showed the following. Milan Dundee Total Total purchases (cartons) 98,000 42,000 140,000 Average purchase price (per carton) $ 20.00 $ 22 $ 20.60 Number of deliveries 80 20 100 Percentage of late deliveries 25 % 10 % 22 % The Accounting Department recorded $602,700 as the cost of late deliveries to customers. Exercise 10-36 (Algo) Activity-Based Costing of Suppliers (LO…arrow_forward
- Problem 5 The Lychee Company is on a calendar year basis. The following data are available ➢Goods in transit shipped FOB destination by a supplier, in the amount of P100,000, had been excluded from the inventory, and further testing revealed that the purchase had been recorded ➢Goods costing P50,000 had been received, included in inventory, and recorded as a purchase. However, upon your inspection the goods were foundto be defective and would be immediately returned. ➢Materials costing P250,000 and billed on December 30 at a selling price of P320,000, had been segregated in the warehouse for shipment to a customer. The materials had been excluded from inventory as a signed purchase order had been received from the customer. Terms, FOB destination. ➢Goods costing P70,000 was out on consignment with Hermie Company. Since the monthly statement from Hermie Company listed those materials as on hand, the items had been excluded from the final inventory and invoiced on December 31 at…arrow_forwardACCT440 Spring 2024 Individual assignments Management Control Case Ivy Company ("Ivy") has been established in Hong Kong for thirty years. It is engaged in manufacturing and retailing of naturally based herbal cosmetic products. Its retail outlets sell both self-made and imported cosmetic products. Recently, many tourists visited HK and are interested in shopping including cosmetic products. Ivy's directors are thinking about extending to online business and offering more choice to retail consumers and overseas wholesalers. As to the self-manufactured products, Ivy conducts extensive research to develop high-quality cosmetic products. Recently, the gross margin has fallen because of increasing competition. Ivy must reduce the price to boost sales volume. Ivy's directors have identified two strategic directions for the coming five-year plan. The first strategy is investing a large amount in R&D to develop differentiated products. The second strategy is investing an affordable amount to…arrow_forwardProblem 13-27 (Algo) Sell or Process Further Decisions [LO13-7] Come-Clean Corporation produces a variety of cleaning compounds and solutions for both industrial and household use. While most of its products are processed independently, a few are related, such as the company’s Grit 337 and its Sparkle silver polish. Grit 337 is a coarse cleaning powder with many industrial uses. It costs $1.20 a pound to make, and it has a selling price of $6.80 a pound. A small portion of the annual production of Grit 337 is retained in the factory for further processing. It is combined with several other ingredients to form a paste that is marketed as Sparkle silver polish. The silver polish sells for $5.00 per jar. This further processing requires one-fourth pound of Grit 337 per jar of silver polish. The additional direct variable costs involved in the processing of a jar of silver polish are: Other ingredients $ 0.55 Direct labor 1.44 Total direct cost $ 1.99 Overhead costs…arrow_forward
- Ethics Case 19-12 International Network Solutions LO19-6 International Network Solutions provides products and services related to remote access networking. The com- pany has grown rapidly during its first 10 years of operations. As its segment of the industry has begun to mature, though, the fast growth of previous years has begun to slow. In fact, this year revenues and profits are roughly the same as last year. One morning, nine weeks before the close of the fiscal year, Rob Mashburn, CFO, and Jessica Lane, controller, were sharing coffee and ideas in Lane's office. Y Lane: Mashburn: Lane: Mashburn: About the Board meeting Thursday. You may be right. This may be the time to suggest a share buyback program. To begin this year, you mean? Right! I know Barber will be lobbying to use the funds for our European expansion. She's probably right about the best use of our funds, but we can always issue more notes next 。 year. Right now, we need a quick fix for our EPS numbers. Our…arrow_forwardQUESTION 4 WT Ltd is a large company that consists of many divisions. The following are scenarios that need to be discussed: Scenario 1: Management decided to combine the packaging department into the retail department. Management created a detailed, formal plan for restructuring and the plan was announced publicly to all the shareholders on 30 September 2022. The company has a year end of 31 December 2022 The following costs will be incurred: Implementation costs R250 000 R 50 000 Future Operating Losses Advertising R 25 000 Discuss with reference to IAS37 whether the restructuring can be recognized as a provision. Indicate the amount at which it can be recognised? Scenario 2: An employee of RT Ltd was injured at work on 15 June 2022 due to faulty equipment, He is suing RT LTD. The lawyers have advised that it is probable that the company will be held liable and the most likely outcome would be R5 000 000. Discuss with reference to IAS37 whether the restructuring can be recognized as…arrow_forwardProblem 12-19 (Algo) Quality Cost Report [LO12-2] In response to intense foreign competition, Florex Company has taken steps to improve the quality of its products. A summary of its quality costs (in thousands) over the past two years is given below: Inspection Quality engineering Depreciation of test equipment Rework labor Statistical process control Cost of field servicing Supplies used in testing Systems development Warranty repairs Costs (in thousands) Last Year $ 630 $ 540 $495 $ 1,080 $ 8 $ 1,260 $ 45 $ 720 $ 4,680 $ 720 This Year $918 $ 728 $ 180 $ 1,530 $ 270 $ 1,178 $ 72 $ 900 $ 1,448 $ 1,440 Net cost of scrap Product testing Product recalls Disposal of production defects $ 990 $ 1,710 $ 2,610 $ 990 $980 $ 1,080 Sales have been flat over the past few years, at $90,000,000 per year. Required: 1. Prepare a quality cost report for this year and last year. Note: Enter amount values in thousands. Round your percentage answers to 2 decimal places (1.e 0.1234 should be entered as…arrow_forward
- ch 10, Sugimoto Household Goods sells 2,000 boxes of toothpaste to Wong DDS for $6,000. Sugimoto's cost is $1 per box. Payment terms are 1/5, n/30. Shipping terms are FOB Destination. On March 13, Wong returns 100 boxes of toothpaste because it does not have tamper proof packaging. Sugimoto cannot resell this toothpaste and must scrap it (throw it away). On March 14 Wong realizes that the toothpaste they received does not have the Disney characters on the packaging. They specifically ordered the Disney characters for their pediatric patients. Wong contacts Sugimoto, who agrees to give them a $800 allowance. Wong agrees to keep the toothpaste to give away to their adult patients. On March 20, Wong pays Sugimoto the outstanding balance, less any applicable discounts. How much does Wong pay Sugimoto? How much of a discount is Wong allowed to take?arrow_forwardQUESTION 1 DotCom Inc. has been experiencing difficulty in selling its sole product, IP-20 since March 2020 as a result of Covid-19 pandemic. Provided below the company's contribution format income statement for the most recent month: RM Sales (19,500 units x RM30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss 585,000 409,500 175,500 180,000 (4.500) Required: b. In order to improve sales, the Sales Manager suggests to reduce 10% of the selling price and increase the monthly advertising budget of RM60,000. He convinces that the action would cause unit sales to double. Evaluate the effect of the changes on the company's monthly net operating income. c. The Production Manager believes that by automating certain operations, the company could reduce variable costs by RM3 per unit and sales would increase by 1/3. However, this decision would increase fixed costs by RM72,000 each month. i. Compute the new break-even point in both units and value. ii.…arrow_forwardE 6-6 Performance obligations; customer option for additional goods or services; residual method LO6-2, LO6-4,LO6-5,LO6-6 Clarks Inc., a shoe retailer, sells boots in different styles. In early November, the company starts selling "SunBoots" to customers for $70 per pair. When a customer purchases a pair of SunBoots, Clarks also gives the customer a 30% discount coupon for any additional future purchases made in the next 30 days. Customers can't obtain the discount coupon otherwise. Clarks anticipates that approximately 20% of customers will utilize the coupon, and that on average those customers will purchase additional goods that normally sell for $100. Required: 1. How many performance obligations are in a contract to buy a pair of SunBoots? 2. Assume Clarks cannot estimate the standalone selling price of a pair of SunBoots sold without a coupon. Prepare a journal entry to record revenue for the sale of 1,000 pairs of SunBoots, assuming that Clarks uses the residual method to…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Pkg Acc Infor Systems MS VISIO CDFinanceISBN:9781133935940Author:Ulric J. GelinasPublisher:CENGAGE L
Pkg Acc Infor Systems MS VISIO CD
Finance
ISBN:9781133935940
Author:Ulric J. Gelinas
Publisher:CENGAGE L