INTERMEDIATE ACCOUNTING
10th Edition
ISBN: 9781264046249
Author: SPICELAND
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 13, Problem 13.22Q
At December 31, the end of the reporting period, the analysis of a loss contingency indicates that an obligation is only reasonably possible, though its dollar amount is readily estimable. During February, before the financial statements are issued, new information indicates the loss is probable. What accounting treatment is warranted?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
What will be the result for failing to record the year-end adjustment for accrued interest on a note payable?
O An understatement of expense and an understatement of current liabilities
An understatement of expense and an overstatement of current liabilities
An overstatement of expense and an understatement of current liabilities
An overstatement of an expense and an overstatement of current liabilities
Required:
(a) Prepare journal entries to record the impairment loss of receivable in 2021 under Statement of Financial Position approach.
(b) Prepare partial Statement of Financial Positions to show the accounts receivables at 31 December 2021.
TRUE OR FALSE?A financial liability that is due within one year after the reporting period shall be classified as current when is refinanced on a long-term basis after the end of the reporting period.
Chapter 13 Solutions
INTERMEDIATE ACCOUNTING
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
- TRUE OR FALSE? (Based on the book) A financial liability that is due within one year after the reporting period shall be classified as current when it is refinanced on a long-term basis after the end of the reporting period.arrow_forward(A) Prepare the journal entries to record the events above dates June 10, July 12, August 10 and October 25. (B) Prepare the adjusting journal entry to record the bad debt provision for the year ended December 31, 2018. (C) Show the ledger account for Allowance for Doubtful Accounts with all entries for 2018 and the ending balance after adjustment at December 31, 2018.arrow_forwardChoose the correct. How should material seasonal variations in revenue be reflected in interim financial statements?a. The seasonal nature should be disclosed, and the interim report should be supplemented with a report on the 12-month period ended at the interim date for both the current and preceding years.b. The seasonal nature should be disclosed, but no attempt should be made to reflect the effect of past seasonality on financial statements.c. The seasonal nature should be reflected by providing pro forma financial statements for the current interim period.d. No attempt should be made to reflect seasonality in interim financial statements.arrow_forward
- How should material seasonal variations in revenue be reflected in interim financial statements?a. The seasonal nature should be disclosed, and the interim report should be supplemented with a report on the 12-month period ended at the interim date for both the current and preceding years.b. The seasonal nature should be disclosed, but no attempt should be made to reflect the effect of past seasonality on financial statements.c. The seasonal nature should be reflected by providing pro forma financial statements for the current interim period.d. No attempt should be made to reflect seasonality in interim financial statements.arrow_forwardThe errors below were noted after the books of CalMart Corporation were audited at the close of 2021 Indicate the effects of each of the following errors with an O for Overstatement, U for understatement and N for no effect in the appropriate column. 2020 Liability 2021 Retained before closing Earnings Retained Eamings after Net Income Liability Retained before closing Eamings Retained Earnings after closing Net Income Asset Asset closing Paid one year insurance premium of P2.000 effective April 1,2020. The entire amount was debited to expense account and no adjustment was made at the end of 2020 On December 31,2020, the Company acquired a parcel of land and a building at a total cost of P5,000,000. The entire amount paid was debited to land account. A reasonable estimate of the cost that should have been allocated to the building was P,2000,000. The building has an estimated life of 20 years. Failure to record supplies on hand at the end of 2020. The supplies on hand amounted to…arrow_forwardRequesting a statement from a major customer as to its agreement or disagreement with a year-end receivable balance is an example of: * Scanning O Inspection of tangible assets O Confirmation O Recalculationarrow_forward
- 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 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.arrow_forward34.Prior to the year-end adjustments of accounts, an entity's Allowance for Doubtful Accounts has a debit balance resulting from a significant amount of accounts receivable that was written off. Based on aging of the receivables and the entity's experience of the extent of uncollectibles, an amount was determined as the required credit balance in Allowance for Doubtful Accounts at year-end.Which of the following statements is true relating to the above-described situation? a. Doubtful accounts expense is equal to the amount determined by aging and analysis of the receivables. b. Doubtful accounts expense is the total amount determined by aging and analysis of the receivables plus the allowance balance before adjustment. c. Doubtful accounts expense is the amount determined by aging and analysis of the receivables less the allowance balance before adjustment. d. Doubtful accounts expense amount cannot be determined.arrow_forwardWhat is the allowance for doubtful accounts on December 31, 2020? From inception of operations, Axis Company carried no allowance for doubtful accounts. Uncollectible accounts were expensed as written off and recoveries were credited to income as collected. During 2020, management recognized that the accounting policy with respect to doubtful accounts was not correct and determined that an allowance for doubtful accounts was necessary. A policy was established to maintain an allowance for doubtful accounts based on historical bad debts loss percentage applied to year-end accounts receivable. The historical bad debt loss percentage is to be recomputed each year based on all available past years up to a maximum of five years. Year Credit sales Writeoffs Recoveries 1,500,000 2,250,000 2,950,000 2016 15,000 38,000 52,000 2017 2,700 2,500 2018 3,300,000 4,000,000 65,000 83,000 2019 4,800 5,0 2020 The entity reported accounts receivable of P1,250,000 on December 31, 2019 and P2,000,000 on…arrow_forward
- Required: (a) What is the total estimated uncollectible amount of accounts receivable? (b) Prepare journal entries to record impairment loss of receivable in 2021 using Statement of Financial Position approach. (c) Prepare a partial statement of financial position as at 31 December 2021 on the accounts receivable. (d) Prepare journal entries to record impairment loss of receivable in 2021 assuming the balance of the Allowance for Impairment account is $7.300 (Cr.) prior to adjustment.arrow_forwardAccess the FASB Accounting Standards Codification at the FASB website (www.fasb.org).Required:Determine the specific citation for accounting for each of the following items:1. If it is only reasonably possible that a contingent loss will occur, the contingent loss should be disclosed.2. Criteria allowing short-term liabilities expected to be refinanced to be classified as long-term liabilities.3. Accounting for the revenue from separately priced extended warranty contracts.4. The criteria to determine if an employer must accrue a liability for vacation payarrow_forwardIn order to generate interim financial reports that contain a reasonable portion of annual expenses, which of the following statements is true? a. an allocation of a portion of an annual bonus would be made as an interim adjustment b. any adjustments for inventory shrinkage would be deferred to year end c. the allowance for uncollectible accounts receivable will be revised at year end d. None of the above are truearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeAuditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Accounting Changes and Error Analysis: Intermediate Accounting Chapter 22; Author: Finally Learn;https://www.youtube.com/watch?v=c2uQdN53MV4;License: Standard Youtube License