If management determines the loss contingency is probable and an amount can be reasonably estimated, then...
If management determines the loss contingency is probable and an
amount can be reasonably estimated, then the company
_______.
- should include a note in the notes to the financial statements but need not record an entry in accounting journals
- must record a liability and a related depreciation expense or loss, and disclose the relevant details of the event in the notes to the financial statements
- must record an asset and a related expense or loss, and disclose the relevant details of the event in the notes to the financial statements
- must record a liability and a related expense or loss, and disclose the relevant details of the event in the notes to the financial statements
Homework Answers
Add Answer to:
If management determines the loss contingency is probable and an
amount can be reasonably estimated, then...
A contingent liability that is probable and can be reasonably estimated must be I. Disclosed. a....
A contingent liability that is probable and can be reasonably estimated must be I. Disclosed. a. b. Not disclosed. Recorded. d. Paid. 2. Suppose that Neuman Exploration Tours has filed a lawsuit against a competitor for an alleged trademark violation. At the end of the year, Neuman's attorney estimates that the company will likely win the lawsuit and be awarded between S1.5 and $2 million, with the most likely amount being S1.8 million. How much should Neuman record as a...
For internally developed intangible assets, research and development expenditures incurred by the firm in the development...
For internally developed intangible assets, research and development expenditures incurred by the firm in the development of a patent are generally recorded as: A current period operating expense. An intangible asset which is amortized over its estimated useful life. An intangible asset which is amortized over 40 years. An intangible asset which is not amortized. Accumulated depletion is reported on the balance sheet as a liability since it normally has a credit balance income statement as an increase in revenue...
Harbour Company disclosed estimated product warranty payable for comparative years as follows: (in millions) Current Year...
Harbour Company disclosed estimated product warranty payable for comparative years as follows: (in millions) Current Year Prior Year Current estimated product warranty payable $3,070 $2,868 Noncurrent estimated product warranty payable 4,345 4,138 Total $7,415 $7,006 Assume that Harbour Company's sales were $135,548 million in the current year and that the total paid on warranty claims during the current year was $3,100 million. Required: a. Why are short, and long-term estimated warranty liabilities separately disclosed? b. Provide the journal entry for...
Question 1 (1 point) Saved The following are all estimates that companies are permitted to use...
Question 1 (1 point) Saved The following are all estimates that companies are permitted to use when calculating depreciation expense, EXCEPT: Useful Life of the Asset Historical Cost to Acquire Asset Residual (a.k.a. Salvage) Value of the Asset # of total units that the equipment is expected to produce over it's lifetime Question 2 (1 point) Saved Inventory is excluded from current assets in the quick ratio because inventory is not as easily converted into cash. True False Question 3...
1.A contingent liability that is probable and can be reasonably estimated will immediately result in: Multiple...
1.A contingent liability that is probable and can be reasonably estimated will immediately result in: Multiple Choice an increase in both liabilities and stockholders’ equity. an increase in liabilities and a decrease in net income. an increase in liabilities without any need for financial statement disclosure. an increase in liabilities and a decrease in assets. 2.Which of the following statements is not true regarding the cash flow statement? Multiple Choice The cash flow statement provides information about changes in all...
Freeman Motors, a motorcycle manufacturer, had the following contingencies. Determine the appropriate accounting treatment for each...
Freeman Motors, a motorcycle manufacturer, had the following contingencies. Determine the appropriate accounting treatment for each of the situations Freeman is facing. a. b. Freeman estimates that it is reasonably possible but not likely that it will lose a current lawsuit. Freeman's attorneys estimate the potential loss will be $4,500,000. Freeman received notice that it was being sued. Freeman considers this lawsuit to be frivolous. Freeman is currently the defendant in a lawsuit. Freeman believes it is likely that it...
29. If it is likely that a company will lose a lawsuit and the amount can...
29. If it is likely that a company will lose a lawsuit and the amount can be reliably estimated, then the company must: a) record the asset. b) disclose only in the notes to the financial statements. c) not record or disclose any information. d) record the loss and the liability. 30. An employee receives a bi-weekly gross salary of $ 2,000. The employee's deductions include income tax of $ 218, CPP of $ 92. El of $ 37, and...
Consultants notify management of Discount Pharmaceuticals that a stroke medication poses a potential health hazard. Counsel...
Consultants notify management of Discount Pharmaceuticals that a stroke medication poses a potential health hazard. Counsel indicates that a product recall is probable and is estimated to cost the company $8 million. Which of the following statement(s) are true? (Select all that apply.) Check All That Apply A loss and a liability must be recorded for $8 million. I Income before tax will be reduced and total liabilities will be increased by $8 million. A disclosure note should be included...
1.The rules used for determining taxable income in various countries: have the same objective as the...
1.The rules used for determining taxable income in various countries: have the same objective as the rules used for determining income for financial reporting purposes. have an objective designed to provide a basis for funding government operations. are not the result of a political process. measure changes in a firm’s underlying economic condition. 2.Which one of the following contingencies must be accrued on the balance sheet? Multiple Choice The likely loss on a lawsuit that the firm’s attorneys believe will...
(3) A Contingent liability is a potential rather than an actual liability because its depends on...
(3) A Contingent liability is a potential rather than an actual liability because its depends on a future event. Some event must happen( the contingency) for a contingent liability to have to be paid. Contingent liabilities are journalized when the likelihood of an actual loss is probable and the amount of the expense can be reasonably estimated. Rags to Riches, a clothing resale store, employs one salesperson, Dee Hunter. Hunters straight time wage is OMR 10 per hour, with time...
A contingent liability that is probable and can be reasonably estimated must be I. Disclosed. a. b. Not disclosed. Recorded. d. Paid. 2. Suppose that Neuman Exploration Tours has filed a lawsuit against a competitor for an alleged trademark violation. At the end of the year, Neuman's attorney estimates that the company will likely win the lawsuit and be awarded between S1.5 and $2 million, with the most likely amount being S1.8 million. How much should Neuman record as a...
For internally developed intangible assets, research and development expenditures incurred by the firm in the development of a patent are generally recorded as: A current period operating expense. An intangible asset which is amortized over its estimated useful life. An intangible asset which is amortized over 40 years. An intangible asset which is not amortized. Accumulated depletion is reported on the balance sheet as a liability since it normally has a credit balance income statement as an increase in revenue...
Harbour Company disclosed estimated product warranty payable for comparative years as follows: (in millions) Current Year Prior Year Current estimated product warranty payable $3,070 $2,868 Noncurrent estimated product warranty payable 4,345 4,138 Total $7,415 $7,006 Assume that Harbour Company's sales were $135,548 million in the current year and that the total paid on warranty claims during the current year was $3,100 million. Required: a. Why are short, and long-term estimated warranty liabilities separately disclosed? b. Provide the journal entry for...
Question 1 (1 point) Saved The following are all estimates that companies are permitted to use when calculating depreciation expense, EXCEPT: Useful Life of the Asset Historical Cost to Acquire Asset Residual (a.k.a. Salvage) Value of the Asset # of total units that the equipment is expected to produce over it's lifetime Question 2 (1 point) Saved Inventory is excluded from current assets in the quick ratio because inventory is not as easily converted into cash. True False Question 3...
Freeman Motors, a motorcycle manufacturer, had the following contingencies. Determine the appropriate accounting treatment for each of the situations Freeman is facing. a. b. Freeman estimates that it is reasonably possible but not likely that it will lose a current lawsuit. Freeman's attorneys estimate the potential loss will be $4,500,000. Freeman received notice that it was being sued. Freeman considers this lawsuit to be frivolous. Freeman is currently the defendant in a lawsuit. Freeman believes it is likely that it...
29. If it is likely that a company will lose a lawsuit and the amount can be reliably estimated, then the company must: a) record the asset. b) disclose only in the notes to the financial statements. c) not record or disclose any information. d) record the loss and the liability. 30. An employee receives a bi-weekly gross salary of $ 2,000. The employee's deductions include income tax of $ 218, CPP of $ 92. El of $ 37, and...
Consultants notify management of Discount Pharmaceuticals that a stroke medication poses a potential health hazard. Counsel indicates that a product recall is probable and is estimated to cost the company $8 million. Which of the following statement(s) are true? (Select all that apply.) Check All That Apply A loss and a liability must be recorded for $8 million. I Income before tax will be reduced and total liabilities will be increased by $8 million. A disclosure note should be included...
Most questions answered within 3 hours.
-
2. Boris recently synthesized an explosive compound he named
Badenoughium. The molecular formula for Bdenoughium is...
asked 1 hour ago -
5. A car decelerate evenly from a velocity of 50mph until rest
in a distance of...
asked 1 hour ago -
IN HTML Programming
1. Write a script that inputs integers (one at a time) and
passes...
asked 2 hours ago -
A dentist uses a mirror to examine a tooth that is 0.75 cm in
front of...
asked 2 hours ago -
You set up a 100,000 line of credit for the business on 1/1/X8,
annual interest is...
asked 2 hours ago -
What is the measurement uncertainty of a pan balance? How did you
get that?
asked 2 hours ago -
Suppose four firms have market shares of 30%, 30%, 20% and 20%.
What is the Herfindahl-Hirschman...
asked 2 hours ago -
IBT Industrial Solutions produces forty units of rack and pinion
type steering gears during an eight...
asked 2 hours ago -
The Ksp for PbI2 is 9.8×10−9 . Will PbI2 precipitate if 2.5 mL
of 0.0025 M...
asked 2 hours ago -
- Write a Person Constructor that initializes `name` and
`age` from arguments.
- All instances of...
asked 2 hours ago -
What is the meaning of the statement: In acid-base catalysis,
acid catalysis involves partial proton transfer...
asked 2 hours ago -
Polo Publishers purchased a multi-color offset press with terms
of $65,000 down and a noninterest-bearing note...
asked 2 hours ago