INT.ACCT. LL W/CONNECT+PROCTORIO PLUS
10th Edition
ISBN: 9781266374395
Author: SPICELAND
Publisher: MCG
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Textbook Question
Chapter 13, Problem 13.19Q
Suppose the analysis of a loss contingency indicates that an obligation is not probable. What accounting treatment, if any, is warranted?
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Which of the following is not considered as a characteristic of a liability?
Present obligation
Arises from past event
Liquidation is reasonably expected to require use of current assets
Results in an outflow of resources
A basic difference between loss contingencies and “real”liabilities is:
a. Liabilities stem from past transactions; loss contingen-cies stem from future events.
b. Liabilities always are recorded in the accountingrecords, whereas loss contingencies never are.c. The extent of uncertainty involved.
d. Liabilities can be large in amount, whereas loss contin-gencies are immaterial.
Which of the following is not a criterion that must be met for an item to be classified as a liability?
A certain cash payment will occur in the future.
A sacrifice will require the entity’s assets or services.
There is a probable future sacrifice.
There is a present obligation that results from a past transaction.
Chapter 13 Solutions
INT.ACCT. LL W/CONNECT+PROCTORIO PLUS
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
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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
- What disclosure is made if a loss contingency is reasonably possible?arrow_forwardWhich of the following statements is false?a. A contingent liability should be disclosed in the notes to the financial statements if thereis a reasonable possibility that a loss (or expense) will occur.b. All contingent liabilities should be reported as liabilities on the financial statements,even those that are unlikely to occur.c. A contingent liability is a potential obligation that depends on the future outcome of pastevents.d. A contingent liability should be accrued if the loss is probable and the amount of theloss can be reasonably estimated.arrow_forwardWhat is/are the rule/rules (and the exceptions, if there be any) in case an object is lost or damaged due to fortuitous event, particularly as to the liability of the debtor in an obligation.arrow_forward
- What is/are the rule/rules (and the exceptions, if there be any) in case an object is lost or damaged due to fortuitous event, particularly as to the liability of the debtor in an obligation. Give specific examples for your answers.arrow_forwardWhich of the following statements is false?Select one:a. A contingent liability should be disclosed in the notes to the financial statements if there is a reasonable possibility that a loss (or expense) will occur.b. A contingent liability should be accrued if the loss is probable and the amount of the loss can be reasonably estimated.c. A contingent liability is a potential obligation that depends on the future outcome of past events.d. All contingent liabilities should be reported as liabilities on the financial statements, even those that are unlikely to occur.arrow_forwardThe risk of an accounting loss from a financial instrument due to possible failure of another party to perform according to terms of the contract is known as: [A] Credit risk [B] Investment risk [C]Market risk [D]Opportunity risk.arrow_forward
- Why is the distinction between a conditional and unconditional contribution important for accounting purposes?arrow_forwardWhich of the following is a characteristic of a current liability? A. It is an avoidable obligation. B. It occurs because of a future transaction or event. C. It cannot be settled with services. D. It creates a present obligation for future payment of cash or services.arrow_forwardAccrued liabilities are obligations for which there is no external transaction. Select one: True Falsearrow_forward
- Why do deferred liabilities arise? Explain your answer with suitable example.arrow_forwardThe accrual of a contingent liability and the related loss should be recorded when the a. Loss resulting from a future event may be material in relation to income. b. Future event that gives rise to the liability is unusual in nature and nonrecurring. c. Amount of the loss resulting from the event is reasonably estimated and the occurrence of the loss is probable. d. Event that gives rise to the liability is unusual and its occurrence is probable.arrow_forwardWhich statement is incorrect in the measurement of a provision? *a. The risks and uncertainties that inevitably surround many events and circumstances shall be taken into account in reaching the best estimate of a provisionb. Where the effect of the time value of money is material, the amount of a provision shall be the present value of the expenditure expected to settle the obligationc. Future events that may affect the amount required to settle the obligation shall be reflected in the amount of the provision where there is sufficient objective evidence that the future events will occurd. Gains from expected disposal of assets shall be taken into account in measuring a provisionarrow_forward
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