Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 8, Problem 8.55DC
1.
To determine
To explain: The
2.
To determine
To identify: The factors that would be considered in determining the contingent liability.
3.
To determine
To explain: The reporting of contingent liability in the financial statements of Company FM.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
8
A customer is suing Ephiyu Company for P550,000 in damages because her child was injured in November 2022 while riding an escalator that stopped suddenly in one of its state-of-the-art stores in Makati. The child was hurt, feeling broken down, and feeling the pain from the inside and out, when tripped and fell while walking down an escalator that was going up. Legal counsel feels that the child is partially at fault, and so deserves all the pain, but that it is probable that the lawsuit will be settled for between P250,000 and P550,000, with the following likely outcome: 30% to be settled at P250,000; 45% to be settled at P340,000 and 25% to be settled at P550,000. How much provision for damages shall be included in the liability section as of December 31, 2022?
A student is suing his college for $2,000,000 stating that his instructor subjected the class to pain and suffering (in the form of accounting homework) and mandatory participation in a squid game-like elimination tournament. The school believes that it is very probable that the student will be successful in their legal claim. The proper accounting treatment is to:
Group of answer choices
disclose the liability in the notes to the financial statements
give the teacher an award
not disclose or journalize the potential liability
record an estimated liability for the legal claim
A6
Most insurance companies will replace a vehicle any time an estimated repair exceeds 80% of the "blue -book" value of the vehicle. Michelle's insurance company paid $8,600 for repairs on her car after an accident. What can be concluded about the blue -book value of the car?
Chapter 8 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 8 - All of the following are reported as current...Ch. 8 - Prob. 2QCCh. 8 - Prob. 3QCCh. 8 - What is accounts payable turnover? a.Purchases on...Ch. 8 - Prob. 5QCCh. 8 - Nicholas Corporation accrues the interest expense...Ch. 8 - Phoebe Corporation signed a six-month note payable...Ch. 8 - Prob. 8QCCh. 8 - Backpack Co. was organized to sell a single...Ch. 8 - Prob. 10QC
Ch. 8 - Potential liabilities that depend on future events...Ch. 8 - A contingent liability should be recorded in the...Ch. 8 - Prob. 8.1ECCh. 8 - Prob. 8.1SCh. 8 - Prob. 8.2SCh. 8 - Prob. 8.3SCh. 8 - Prob. 8.4SCh. 8 - (Learning Objective 3: Account for a short-term...Ch. 8 - Prob. 8.6SCh. 8 - (Learning Objective 4: Report warranties in the...Ch. 8 - (Learning Objective 4: Account for accrued...Ch. 8 - (Learning Objective 5: Interpret a companys...Ch. 8 - Prob. 8.10AECh. 8 - Prob. 8.11AECh. 8 - LO 3 (Learning Objective 3: Purchase inventory,...Ch. 8 - (Learning Objective 3: Record note payable...Ch. 8 - (Learning Objective 3: Account for a short-term...Ch. 8 - Prob. 8.15AECh. 8 - Prob. 8.16AECh. 8 - Prob. 8.17AECh. 8 - Prob. 8.18AECh. 8 - Prob. 8.19AECh. 8 - Prob. 8.20BECh. 8 - Prob. 8.21BECh. 8 - LO 3 (Learning Objective 3: Purchase inventory,...Ch. 8 - Prob. 8.23BECh. 8 - Prob. 8.24BECh. 8 - Prob. 8.25BECh. 8 - Prob. 8.26BECh. 8 - Prob. 8.27BECh. 8 - (Learning Objectives 1, 2, 3, 4: Report current...Ch. 8 - Prob. 8.29BECh. 8 - Prob. 8.30QCh. 8 - For the purpose of classifying liabilities as...Ch. 8 - Prob. 8.32QCh. 8 - Prob. 8.33QCh. 8 - Prob. 8.34QCh. 8 - Prob. 8.35QCh. 8 - Prob. 8.36QCh. 8 - Prob. 8.37QCh. 8 - Prob. 8.38QCh. 8 - Prob. 8.39QCh. 8 - Prob. 8.40QCh. 8 - Prob. 8.41QCh. 8 - Prob. 8.42QCh. 8 - Prob. 8.43QCh. 8 - Group A LO 1, 2, 3, 4 (Learning Objective 1, 2, 3,...Ch. 8 - Prob. 8.45APCh. 8 - LO 1, 2, 3, 4 (Learning Objectives 1, 2, 3, 4:...Ch. 8 - LO 4, 5 (Learning Objectives 4, 5: Account for...Ch. 8 - Group B LO 1, 2, 3, 4 (Learning Objectives 1, 2,...Ch. 8 - Prob. 8.49BPCh. 8 - Prob. 8.50BPCh. 8 - Prob. 8.51BPCh. 8 - Prob. 8.52CEPCh. 8 - Prob. 8.53SCCh. 8 - Prob. 8.54DCCh. 8 - Prob. 8.55DCCh. 8 - Prob. 8.56EICCh. 8 - Prob. 1FFCh. 8 - Prob. 1GP
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
- B16. 1.In order to encourage employees to “leave your car at home”, Jax Corporation wants to issue $100 transit passes every month to all employees agreeing to use the subway to get to work. The passes are valid on the Metro Transit line that operates trains and subways in town. Jax wants to know if the value of the passes will be taxable to their employees. What do you tell Jax? a. The passes are considered taxable compensation to employees. b. The passes are considered “qualified transportation” fringe benefits to employees and, thus, nontaxable. c. The passes are considered gifts to employees and are subject to both income and gift tax.arrow_forwardq15 Which of the following are circumstances that may indicate that the asset may be impaired? (i) A motor vehicle has been damaged in an accident (ii) A debtor is in financial difficulty (iii)Consumer tastes have changed in the market and sales prices of the inventory have been reduced so that the goods will have to be sold at much lower prices, if at all (iv) Cost prices of raw materials used in production have increased Select one: a. (i), (ii), (iii) and (iv) b. (i), (ii), (iv) only c. (i) and (iv) only d. (iv) onlyarrow_forwardKareem Construction Company has the following amounts of interest-bearing debt and common equity capital:262 Part 3: Planning for the FutureCopyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.FINANCINGSOURCEDOLLARAMOUNTINTERESTRATECOST OFCAPITALShort-term loan $200,000 12%Long-term loan $200,000 14%Equity capital $600,000 22%Kareem Construction is in the 30 percent average tax bracket.A. Calculate the after-tax WACC for Kareem.B. Show how Kareem’s WACC would change if the tax rate dropped to 25 percent and the estimated cost of equity capital were based on a risk-free rate of 7 percent,…arrow_forward
- Your insured has an O.A.P. 1 Owner's Policy with $1,000,000 Liability, standard Accident Benefits and All Perils coverage. Near Sudbury, Ontario he/she rear-ends another automobile and is found liable for the accident. Your insured's vehicle is a total loss. Your insured is convicted of impaired driving. Which one (1) of these statements is true? Insured's policy will pay - for the damage to the third party vehicle and subrogate against your insured. nothing for the damage to your insured's car because he/she was impaired. Third party damage will be paid by third party's insurer. for the damage to the third party vehicle with no right to for the damage to the third party vehicle with no right to subrogate against your insured. for your insured's collision loss only.arrow_forwardC has initiated a lawsuit against Agency A for recovery of damages when accidentally one of the vehicles owned by the agency collided with the car then driven by C. The Chief Legal Counsel of the Agency estimates from experience that at December 2015, the entity has a 60% chance of winning the lawsuit and thereby avoiding the payment of damages. Furthermore, the counsel estimates that the agency has 20% chance of being ordered to pay C damages of P100,000 and a 20% chance of being ordered to pay C damages of P10,000. . State whether a contingent liability or contingent asset exists. Explain your answers by stating the criteria of your answers belowarrow_forwardC has initiated a lawsuit against Agency A for recovery of damages when accidentally one of the vehicles owned by the agency collided with the car then driven by C. The Chief Legal Counsel of the Agency estimates from experience that at December 2015, the entity has a 60% chance of winning the lawsuit and thereby avoiding the payment of damages. Furthermore, the counsel estimates that the agency has 20% chance of being ordered to pay C damages of P100,000 and a 20% chance of being ordered to pay C damages of P10,00 Use the facts given in No. 1, but this time assumes that on December 31, 2015, the Chief Legal Counsel of Agency A estimates from past experience that the possibility of losing the case filed by C is remote. -State whether a contingent liability or contingent asset exists.-Explain your answers by stating the criteria of your answers below.arrow_forward
- Brian was involved in an auto accident and when she was at fault. As own car sustain $3726 damages and the other vehicle cost $1324 to repair. Brian was not injured but the driver of the other car required medical treatments cost in $36,375 and a passengers injuries total $29,704, Brian’s policy includes 50/100/50 liability a $500 deductible collision and $100 deductible comprehensive. How much of the damages must the insurance company Pay? Answer key A-$500 B-$1,324 C-$3,226 D-$70,629arrow_forwardBusiness law class Bam 317. I need assistance with an original essay free of plagiarism following standard essay format of 400-500 words for the following question: “What changes should be made to copyright law to reflect the ease with which much creative material can be produced and distributed over the internet? What concerns are there with Anya such law?book isbn -13 9780136085546 Henry Cheeseman seventh edition 2010 what is the cost for this assistance?arrow_forward1. Asunción was involved in an auto accident in which she was at fault. Her own car sustained $2,403 damages and the other vehicle cost $316 to repair. Asunción was not injured, but the driver of the other car required medical treatment costing $2,398. There was additional property damage in the amount of $2,358. Asunción's policy includes 10/20/5 liability, $500 deductible collision, and $100 deductible comprehensive. How much of the damages must Asunción pay? A. $316 B. $500 C. $6,975 D.$7,475 2.Texas Manufacturing had a net income before taxes of $2,794,400. Find the tax liability. (Assume the corporate tax rate is 21%.) A. $558,880 B. $586,824 C. $1,033,928 D. $1,397,200arrow_forward
- You and the driver of the other car were the only people involved in the accident. You were not injured. You have a 50/100/50 liability insurance policy with no deductible. You have collision insurance with a deductible of $1,000. The other driver's bodily injury claim is $60,000 for medical expenses related to a broken leg. The other car was valued at $25,000 and requires $7,000 in repairs. Your car was valued at $13,000 and requires $15,000 in repairs. The accident damaged a city light pole that will cost $1,800 to replace. Use the information above to determine the following: the total amount your liability insurance will pay for the accident the total amount your collision insurance will pay for the accident the amount of additional damages you are responsible for as a result of the accidentarrow_forwardC7-73 Calculate breakeven and margin of safety after hotel renovation (Learning Objective 2) Cost-Volume-Profit Analysis 437 This case is a continuation of the Caesars Entertainment Corporation serial case that began in Chapter 1. Refer to the introductory story in chapter 1 (see page 43) for additional background. (The components of the Caesars serial case can be completed in any order.) Caesars Palace® Las Vegas made headlines when it undertook a $75 million renovation. In mid-September 2015, the hotel closed its then-named Roman Tower, which was last updated in 2001, and started a major renovation of the 567 rooms housed in that tower . On January 1, 2016, the newly renamed Julius Tower reopened, replacing the Roman Tower. In addition to renovating the existing rooms and suites in the former Roman Tower, 20 guest rooms were added to the Roman Tower. With the renovation completed, Caesars expects the Julius Tower room rate to average around $149 per night. This increase, a $25 or 20…arrow_forwardConsider the following scenario: A hoverboard is a self-balancing scooter that uses body position and weight transfer to control the device. Hoverboards use a lithium-ion battery pack, which was found to overheat causing an increased risk for the product to catch fire or explode. Several people were badly injured from these fires and explosions. As a result, a recall was issued in mid-2016 on most hoverboard models. Customers were asked to return the product to the original point of sale (the retailer). Retailers were required to accept returns and provide repair when available. In some cases, retailers were held accountable by consumers, and not the manufacturer of the hoverboards. You are the retailer in this situation and must decide if the hoverboard scenario creates any contingent liabilities. If so, what are the contingent liabilities? Do the conditions meet FASB requirements for contingent liability reporting? Which of the four possible treatments are best suited for the…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT