The reason for not disclosing the contingent liability by Company.

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Answer 1

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 8, Problem 8.56EIC

1.

To determine

The reason for not disclosing the contingent liability by Company.

2.

To determine

To Identify: The parties involved in the decision and the potential consequences to each.

3. a

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

3. b

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

3. c

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

4.

To determine

The impact of future changes in accounting standards, both at the U.S. level and the international level, likely have on the issue of disclosure of loss contingencies.

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Students have asked these similar questions

The Boeing Company, manufacturer of jet aircraft, is the defendant in numerous lawsuits claiming unfair trade practices. Boeing has strong incentives not to disclose these contingent liabilities. However, financial accounting standards require that companies report their contingent liabilities. Required: a. Why would a company prefer not to disclose its contingent liabilities? b. Describe how a bank could be harmed if a company seeking a loan did not disclose its contingent liabilities. c. What is the ethical tightrope that each company must walk when it reports its contingent liabilities?

Microsoft Corporation is the defendant in numerous lawsuits claiming unfair tradepractices. Microsoft has strong incentives not to disclose these contingent liabilities. However,U.S. GAAP requires that companies report their contingent liabilities.Requirements1. Why would a company prefer not to disclose its contingent liabilities?2. Identify the parties involved in the decision and the potential consequences to each.3. Analyze the issue of whether to report contingent liabilities from lawsuits from thefollowing standpoints:a. Economicb. Legalc. Ethical4. What impact could future changes in accounting standards, both at the U.S. level and theinternational level, likely have on the issue of disclosure of loss contingencies?

Sell-Soft is the defendant in numerous lawsuits claiming unfair trade practices. Sell- Soft has strong incentives not to disclose these contingent liabilities. However, GAAP requires that companies report their contingent liabilities. Requirements Why would a company prefer not to disclose its contingent liabilities? Describe how a bank could be harmed if a company seeking a loan did not disclose its contingent liabilities. What ethical tightrope must companies walk when they report contingent liabilities?

Answer 2

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 8, Problem 8.56EIC

1.

To determine

The reason for not disclosing the contingent liability by Company.

2.

To determine

To Identify: The parties involved in the decision and the potential consequences to each.

3. a

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

3. b

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

3. c

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

4.

To determine

The impact of future changes in accounting standards, both at the U.S. level and the international level, likely have on the issue of disclosure of loss contingencies.

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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 8, Problem 8.56EIC

1.

To determine

The reason for not disclosing the contingent liability by Company.

2.

To determine

To Identify: The parties involved in the decision and the potential consequences to each.

3. a

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

3. b

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

3. c

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

4.

To determine

The impact of future changes in accounting standards, both at the U.S. level and the international level, likely have on the issue of disclosure of loss contingencies.

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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 8, Problem 8.56EIC

1.

To determine

The reason for not disclosing the contingent liability by Company.

2.

To determine

To Identify: The parties involved in the decision and the potential consequences to each.

3. a

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

3. b

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

3. c

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

4.

To determine

The impact of future changes in accounting standards, both at the U.S. level and the international level, likely have on the issue of disclosure of loss contingencies.

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Answer 5

Chapter 8, Problem 8.56EIC

1.

To determine

The reason for not disclosing the contingent liability by Company.

2.

To determine

To Identify: The parties involved in the decision and the potential consequences to each.

3. a

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

3. b

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

3. c

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

4.

To determine

The impact of future changes in accounting standards, both at the U.S. level and the international level, likely have on the issue of disclosure of loss contingencies.

Answer 6

Chapter 8, Problem 8.56EIC

1.

To determine

The reason for not disclosing the contingent liability by Company.

Answer 7

Chapter 8, Problem 8.56EIC

1.

To determine

The reason for not disclosing the contingent liability by Company.

Answer 8

2.

To determine

To Identify: The parties involved in the decision and the potential consequences to each.

Answer 9

2.

To determine

To Identify: The parties involved in the decision and the potential consequences to each.

Answer 10

3. a

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

Answer 11

3. a

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

Answer 12

3. b

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

Answer 13

3. b

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

Answer 14

3. c

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

Answer 15

3. c

To determine

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

Answer 16

4.

To determine

The impact of future changes in accounting standards, both at the U.S. level and the international level, likely have on the issue of disclosure of loss contingencies.

Answer 17

4.

To determine

The impact of future changes in accounting standards, both at the U.S. level and the international level, likely have on the issue of disclosure of loss contingencies.

Answer 18

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Answer 19

Expert Solution & Answer

Answer 20

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Answer 21

Ch. 8 - All of the following are reported as current...Ch. 8 - Prob. 2QC Ch. 8 - Prob. 3QC Ch. 8 - What is accounts payable turnover? a.Purchases on...Ch. 8 - Prob. 5QC Ch. 8 - Nicholas Corporation accrues the interest expense...Ch. 8 - Phoebe Corporation signed a six-month note payable...Ch. 8 - Prob. 8QC Ch. 8 - Backpack Co. was organized to sell a single...Ch. 8 - Prob. 10QC

The reason for not disclosing the contingent liability by Company.

Solution Summary: The author explains the reasons for not disclosing a company's contingent liability.

Concept explainers

The reason for not disclosing the contingent liability by Company.

To Identify: The parties involved in the decision and the potential consequences to each.

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

To Analyze: The issue of whether to report contingent liabilities from lawsuits from the following standpoints

The impact of future changes in accounting standards, both at the U.S. level and the international level, likely have on the issue of disclosure of loss contingencies.

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Chapter 8 Solutions