FINANCIAL ACCOUNTING W/ACCESS >CI<
2nd Edition
ISBN: 9781259999024
Author: SPICELAND
Publisher: MCG CUSTOM
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Chapter 8, Problem 18RQ
To determine
To Identify: the proper accounting treatment.
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If a contingent liability is probable but estimable only within a range, what amount, if any, should the firm report?
40. When an entity breaches an undertaking under a long-term loan agreement on or before the balance sheet date with the effect that the liability becomes payable on demand, (choose the incorrect statement)
a. The liability is classified as non-current, even if the lender has agreed, after the balance sheet date and before the authorization of the financial statements for issue, not to demand payment as a consequence of the breach
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d. The…
Which 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.
Chapter 8 Solutions
FINANCIAL ACCOUNTING W/ACCESS >CI<
Ch. 8 - Prob. 1RQCh. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - Provide examples of current liabilities in the...Ch. 8 - Prob. 5RQCh. 8 - Prob. 6RQCh. 8 - How does commercial paper differ from a normal...Ch. 8 - Prob. 8RQCh. 8 - Prob. 9RQCh. 8 - Prob. 10RQ
Ch. 8 - Prob. 11RQCh. 8 - Prob. 12RQCh. 8 - Prob. 13RQCh. 8 - Prob. 14RQCh. 8 - Prob. 15RQCh. 8 - Prob. 16RQCh. 8 - Prob. 17RQCh. 8 - Prob. 18RQCh. 8 - Prob. 19RQCh. 8 - Prob. 20RQCh. 8 - Prob. 21RQCh. 8 - Prob. 22RQCh. 8 - Prob. 23RQCh. 8 - Record notes payable (LO82) Flip Side of BE82 On...Ch. 8 - Prob. 8.2BECh. 8 - Record notes receivable (LO82) Flip Side of BE81...Ch. 8 - Determine interest expense (LO82) Record...Ch. 8 - Prob. 8.5BECh. 8 - Record deferred revenues (LO84) On December 18,...Ch. 8 - Prob. 8.7BECh. 8 - Prob. 8.8BECh. 8 - Prob. 8.9BECh. 8 - Prob. 8.10BECh. 8 - Prob. 8.11BECh. 8 - Prob. 8.12BECh. 8 - Prob. 8.13BECh. 8 - Prob. 8.14BECh. 8 - Prob. 8.15BECh. 8 - Determine proper classification of liabilities...Ch. 8 - Prob. 8.2ECh. 8 - Prob. 8.3ECh. 8 - Prob. 8.4ECh. 8 - Determine interest expense (LO82) OS Environmental...Ch. 8 - Record a line of credit (LO82) The following...Ch. 8 - Calculate payroll withholdings and payroll taxes...Ch. 8 - Record payroll (LO83) During January, Luxury...Ch. 8 - Prob. 8.9ECh. 8 - Prob. 8.10ECh. 8 - Analyze and record a contingent liability (LO85)...Ch. 8 - Prob. 8.12ECh. 8 - Prob. 8.13ECh. 8 - Prob. 8.14ECh. 8 - Prob. 8.15ECh. 8 - Complete the accounting cycle using current...Ch. 8 - Prob. 8.1APCh. 8 - Prob. 8.2APCh. 8 - Prob. 8.3APCh. 8 - Record Payroll (LOS3) Vacation Destinations offers...Ch. 8 - Prob. 8.5APCh. 8 - Prob. 8.6APCh. 8 - Prob. 8.7APCh. 8 - Prob. 8.8APCh. 8 - Selected financial data regarding current assets...Ch. 8 - Prob. 8.1BPCh. 8 - Prob. 8.2BPCh. 8 - Prob. 8.3BPCh. 8 - Record Emily Turnbull, president of Aerobic...Ch. 8 - Prob. 8.5BPCh. 8 - Logins Roadhouse opened a new restaurant in...Ch. 8 - Record contingencies (LO85) Compact Electronics is...Ch. 8 - Prob. 8.8BPCh. 8 - Calculate and analyze rates (LO86) Selected...Ch. 8 - Great AdventuresContinuing Problem (This is a...Ch. 8 - Prob. 8.2APFACh. 8 - Prob. 8.3APFACh. 8 - Comparative Analysis American Eagle Outfitters,...Ch. 8 - Prob. 8.5APECh. 8 - Written Communication Western Manufacturing is...Ch. 8 - Earnings Management Quattro Technologies, a...
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- 34. The following statements are correct, except a. A liability will be reported at less than its maturity amount prior to the maturity date if the stated rate of interest on the liability is higher than the market rate of interest. b. A liability is created because of the acquisition of an asset, payment of another liability, incurrence of an expense, declaration of cash or property dividend, a loss, or a revenue collected in advance. In all cases, each of these “causes” usually provides the basis for measuring the liability. c. Accounts payable with customary term of 18 months is classified as current liability. d. Most liabilities have stated and effective interest rates that are the same; in such a situation the principal, face, and maturity amounts are all the same.arrow_forward1. Which of the following is an essential characteristic for an obligation to qualify as a liability? a. The obligation should have a definite amount at the report date. b. The party to whom payment will be made should be especially identifiable at report date c. The obligation should be settled in cash. d. The obligation should arise from past transactions of the enterprise e. All of the choices 2. Which of these is not a current liability? a. Serial maturity of long-term obligations b. Payables in providing services to be offered for sale c. Accruals for salaries and wages d. Contractual obligations falling due at an early date which is expected to be refunded e. none of the choices 3. An estimated liability is an obligation that is uncertain as to: a. NO - amount; NO - existence b. YES - amount; NO - existence c. NO - amount; YES - existence d. YES - amount; YES - existencearrow_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_forward
- 34-Which of the following is NOT a contingent liability? a. Product warranty b. Pending law suit for property damage c. Pending law suit for slander d. Discounted note receivablearrow_forward14 Risk related to counterparty failure to meet their obligation based on the initially agreed terms is referred to as:* A. Operational risk B. Funding risk C. Credit risk D. Fiduciary riskarrow_forwardWhen should a contingent liability be recognized and reported on the financial statements? A. Reporting contingent liabilities do not require they be probable or reasonably estimated B. When the contingent liability is probable C. When a reasonable estimation can be made of the amount owed D. When the contingent liability is probable and a reasonable estimation can be made of the amount owedarrow_forward
- Which 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_forwardAccording to FASB, when should a company journalize a contingent liability? A. Do not journalize the contingent liability under any circumstances. B. Journalize the contingent liability, even though you will probably win the lawsuit. C. Journalize the contingent liability only if the amount can be estimated and the probability of loss is reasonably possible. D. Journalize the contingent liability if it is probable that the loss will occur, and the amount of the loss can be reasonably estimated. thanks for help appareciated it rajtir harrow_forward(35) If a company has any debt covenants, those debt covenants need to be considered whenever that company makes any decisions. True or False.arrow_forward
- TRUE OR FALSE A liability can exist even if the party to whom the obligation is owed is not specifically identified.arrow_forwardWhen the amount of a contingent liability cannot be reasonably estimated but its likelihood is probable, the company should: Multiple Choice include a description in the notes to the financial statements. record the amount of the liability times the probability of its occurrence. exclude the information about the contingent liability from its financial statements and footnotes. record the amount of the liability as a long-term liability on the balance sheet.arrow_forwardTo be recorded as a liability, does the obligation have to be absolute?arrow_forward
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