Homework Answers
a. Disclose in the notes as contingent liability is probable but can not be estimated.
b. Ignore
c. Disclose in the notes as contingent liability is possible not probable.
d.Record liability on the Balance Sheet
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Please match the accounting treatment with the conditions of the pending lawsuit The likelihood is probable...
15) Huprey Co. is the defendant in the following legal claims. For each of following claims,...
15) Huprey Co. is the defendant in the following legal claims. For each of following claims, does Huprey (a) record a liability, (b) disclose in notes, or (c) have no disclosure. 1. Huprey can resonably estimate that a pending lawsuit will result in damages of $1,390,000it is probable that Huprey will lose the case. Have no disclosure. Disclose in notes. Record a liability. 2. It is reasonably possible that Huprey will lose a pending lawsuit. The loss cannot be estimable....
Exhibit 8: Accounting Treatment of Contingent Liabilities Discuss Exhibit 8, to receive full credit include include...
Exhibit 8: Accounting Treatment of Contingent Liabilities
Discuss Exhibit 8, to receive full credit include include the
definitions of accrual and cash basis accounting systems,
accounting for pensions and contingent liabilities, and GAAP in
your answer.
Likelihood of Occurring Accounting Treatment Measurement Probable Estimable Record and Disclose Liability Not Estimable Disclose Liability Contingency Reasonably Possible Disclose Liability Remote None
Huprey Co. is the defendant in the following legal claims. For each of following claims, does...
Huprey Co. is the defendant in the following legal claims. For each of following claims, does Huprey (a) Record liability. (b) Disclose in notes, or ( No disclosure. 1. Huprey is very likely to lose a pending lawsuit. It reasonably estimates that damages paid will be $1 million • Record liability No disclosure. Disclose in notes 2. There is a remote (unlikely) chance Huprey will lose a pending lawsuit. The plaintiff is suing Huprey for $5 million Record liability No...
Question 8 0/0.41 pts A company has a lawsuit pending with regard to patent infringement. The...
Question 8 0/0.41 pts A company has a lawsuit pending with regard to patent infringement. The amount of the loss can be estimated and has a probable chance of occurrence. What journal entry is required? debit Estimated Lawsuit Loss and credit Estimated Lawsuit Liability debit Lawsuit Loss and credit Cash debit Estimated Lawsuit Loss and credit Cash debit Cash and credit Estimated Lawsuit Liability Question 7 0/0.41 pts Unearned Service Revenue relating to services, to be provided in one month,...
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...
Question 15 5 pts Contingent liabilities must be recorded if: ООО The future event is probable...
Question 15 5 pts Contingent liabilities must be recorded if: ООО The future event is probable and the amount owed can be reasonably estimated The future event is remote The future event is reasonably possible The amount owed cannot be reasonably estimated All of the above
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...
please solve ABCD Exercise 8-13A Determine proper treatment of a contingent liability (LOV-5) Pacific Cruise Line...
please solve ABCD
Exercise 8-13A Determine proper treatment of a contingent liability (LOV-5) Pacific Cruise Lines is a defendant in litigation involving a swimming accident on one of its three cruise ships Required: 1 The likelihood of a payment occurring is probable, and the estimated amount is $110 million 2. The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $0.90 to $110 million 3. The likelihood of a payment occurring...
Explain the accounting treatment for each problem and what does the firm needs to do from...
Explain the accounting treatment for each problem and what does the firm needs to do from an accounting perspective? 1. The company will likely lose a lawsuit, but an amount is not reasonably estimable at this time. 2. The company will likely lose a lawsuit and can reasonably estimate the amount at $2.3M. 3. The company faces a lawsuit and believes there is little chance of losing the case. The amount the company would have to pay is $10M. 4....
A company should accrue a loss contingency only if the likelihood that a liability has been...
A company should accrue a loss contingency only if the likelihood that a liability has been incurred is: Multiple Choice At least reasonably possible and the amount of the loss is known. Probable and the amount of the loss can be reasonably estimated. At least reasonably possible and the amount of the loss can be reasonably estimated. More likely than not and the amount of the loss is known. Which of the following is not true about deferred revenue? Multiple...
Exhibit 8: Accounting Treatment of Contingent Liabilities
Discuss Exhibit 8, to receive full credit include include the
definitions of accrual and cash basis accounting systems,
accounting for pensions and contingent liabilities, and GAAP in
your answer.
Likelihood of Occurring Accounting Treatment Measurement Probable Estimable Record and Disclose Liability Not Estimable Disclose Liability Contingency Reasonably Possible Disclose Liability Remote None
Huprey Co. is the defendant in the following legal claims. For each of following claims, does Huprey (a) Record liability. (b) Disclose in notes, or ( No disclosure. 1. Huprey is very likely to lose a pending lawsuit. It reasonably estimates that damages paid will be $1 million • Record liability No disclosure. Disclose in notes 2. There is a remote (unlikely) chance Huprey will lose a pending lawsuit. The plaintiff is suing Huprey for $5 million Record liability No...
Question 8 0/0.41 pts A company has a lawsuit pending with regard to patent infringement. The amount of the loss can be estimated and has a probable chance of occurrence. What journal entry is required? debit Estimated Lawsuit Loss and credit Estimated Lawsuit Liability debit Lawsuit Loss and credit Cash debit Estimated Lawsuit Loss and credit Cash debit Cash and credit Estimated Lawsuit Liability Question 7 0/0.41 pts Unearned Service Revenue relating to services, to be provided in one month,...
Question 15 5 pts Contingent liabilities must be recorded if: ООО The future event is probable and the amount owed can be reasonably estimated The future event is remote The future event is reasonably possible The amount owed cannot be reasonably estimated All of the above
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...
please solve ABCD
Exercise 8-13A Determine proper treatment of a contingent liability (LOV-5) Pacific Cruise Lines is a defendant in litigation involving a swimming accident on one of its three cruise ships Required: 1 The likelihood of a payment occurring is probable, and the estimated amount is $110 million 2. The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $0.90 to $110 million 3. The likelihood of a payment occurring...
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