Contingent Liability 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 determine: Appropriate way to report the situation.

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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 13, Problem 13.19E

To determine

Contingent Liability

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 determine: Appropriate way to report the situation.

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48 Assume that Oman Oil Marketing Company has credit sales of OMR 100,000 in 2019, of which OMR30,000 remains uncollected at December 31. The credit manager estimates that OMR 15,000 of these sales will prove uncollectible. From the following given options, identify the journal entry to be recorded in the books of Oman Oil Marketing company for writing of uncollectable accounts receivables under Allowance method. a. Dr Allowance for doubtful accounts OMR 30000 and Cr Bad debt expenses A/C OMR 30000 b. Dr Bad debt expenses A/C OMR 15000 and Cr Accounts receivables OMR 15000 c. Dr Bad debt expenses A/c OMR 15000 and Cr Allowance for doubtful accounts OMR 15000 d. Dr Bad debt expenses A/cOMR 30000 and Cr Allowance for doubtful accounts OMR 30000 Clear my choice Assume that Oman Oil Marketing Company has credit sales of OMR 100,000 in 2019, of which OMR30,000 remains uncollected at December 31. The credit manager estimates that OMR 15,000 of these sales will prove…

Brief Exercise 8-4 (Part Level Submission) At the end of 2019, Sheffield Corp. has accounts receivable of $739,200 and an allowance for doubtful accounts of $67,900. On January 24, 2020, the company learns that its receivable from Megan Gray is not collectible, and managernent authorizes a write-off of $6,500. > (a) v (b) X Your answer is incorrect. Try again. What is the cash realizable value of the accounts receivable (1) before the write-off and (2) after the write-off? Before Write-Off After WWrite-Off Cash realizable value 671100 671100 SHOW LIST OF ACCOUNTS

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 13, Problem 13.19E

To determine

Contingent Liability

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 determine: Appropriate way to report the situation.

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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 13, Problem 13.19E

To determine

Contingent Liability

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 determine: Appropriate way to report the situation.

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 13, Problem 13.19E

To determine