Write the reason for contingent liabilities.

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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 9, Problem 4SE

1.

To determine

Write the reason for contingent liabilities.

2.

To determine

Identify how the contingent liability becomes real liability for Incorporation P.

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Item B. Contingent Liability Facts: You are auditing a very successful and highly profitable manufacturing company as of December 31, 2020. The Company has always maintained adequate insurance in different areas. The Company has decided, effective January 1, 2021, not to purchase insurance against risk of loss that may result from injury to others, damage to the property of others, or interruption of its business operations. The Company would like to record a $5,000,000 reserve as of December 31, 2020 for claims associated with future events which may occur. Required: Should the Company record this $5,000,000 Reserve for Claims (a contingent liability) in its 12/31/2020 Financial Statements? Why or why not?

Accounting A. Tax payer incurred expenses of SAR 10,000 to alter and improve equipment with a cost base of SAR 100,000. Are these expenses deductible under article 18 of the law? B. Tax payer recorded the following journal entry Dr. Bad debt expense 10,000 Cr. Provision for doubtful receivable 10,000 Required: Is that provision deductible under article (14) of the law C. 1n 2020 Dr. Accounts receivable (Ibrahim) 100,000 Cr. Sales 100,000 In 2021 Dr. Bad debt expense 20,000 Cr. Accounts receivable Ibrahim) Required: Is that bad debt expense deductible under article (14) of the law?

E-LEARNING COST ACCOUNTING ASSIGNMENT Answer all the THREE Questions. 1 Mr Gardens, the financial controller of Sugarland Ltd, accidentally tossed the company's cost records into a wastebasket which had been light .On realising that mistake, he rushed to the roaring blaze and managed to retrieve only a few of the records. From the salvaged records, he managed to determine the following facts about the current year 2020: (i) Sales totaled sh 1,000,000 during 2020. (ii) The beginning inventories for the year were: work in progress sh 120,000; Finished goods sh 60,000. (iii) There were no closing inventories of raw materials. (iv) Direct labor is equal to 25% of conversion cost; direct, labor is also equal to 40% of prime cost. (v) The work in progress inventory decreased by sh 20,000 during the year. (vi)Gross margin during the year was 55% of sales. (vii) Manufacturing overheads amounted to sh 240,000 in the year. (iv) Administrative expenses for 2014 were twice as great as net income…

Answer 2

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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 9, Problem 4SE

1.

To determine

Write the reason for contingent liabilities.

2.

To determine

Identify how the contingent liability becomes real liability for Incorporation P.

Expert Solution & Answer

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Answer 3

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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 9, Problem 4SE

1.

To determine

Write the reason for contingent liabilities.

2.

To determine

Identify how the contingent liability becomes real liability for Incorporation P.

Expert Solution & Answer

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Check out a sample textbook solution

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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 9, Problem 4SE

1.

To determine

Write the reason for contingent liabilities.

2.

To determine

Identify how the contingent liability becomes real liability for Incorporation P.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 4SE

1.

To determine

Write the reason for contingent liabilities.

2.

To determine

Identify how the contingent liability becomes real liability for Incorporation P.

Answer 6

Chapter 9, Problem 4SE

1.

To determine

Write the reason for contingent liabilities.

Answer 7

Chapter 9, Problem 4SE

1.

To determine

Write the reason for contingent liabilities.

Answer 8

2.

To determine

Identify how the contingent liability becomes real liability for Incorporation P.

Answer 9

2.

To determine

Identify how the contingent liability becomes real liability for Incorporation P.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 9.A - Calculate employee payroll (Learning Objective 8)...Ch. 9.A - Calculate net pay (Learning Objective 8) 5-10 min....Ch. 9.A - Employer payroll costs (Learning Objective 8) 5-10...Ch. 9.A - Prob. 4AE Ch. 9.A - Prob. 5AE Ch. 9.A - Prob. 6AE Ch. 9.A - Prob. 7BE Ch. 9.A - Prob. 8BE Ch. 9.A - Calculating gross and net pay (Learning Objective...Ch. 9.A - Calculating gross and net pay (Learning Objective...

Write the reason for contingent liabilities.

Solution Summary: The author explains that contingent liabilities depend on a future event, and the company is not liable for any product losses. They also identify how the contingent liability becomes real liability for Incorporation P

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Write the reason for contingent liabilities.

Identify how the contingent liability becomes real liability for Incorporation P.

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