Contingent liability can be reasonably estimated

Assignment Help Financial Accounting

Reference no: EM131296146

When the amount of a contingent liability can be reasonably estimated and its likehood is possible but not probable, the company should:

A. accrue the amount of the liability as a long term liability

B. exclude any information about the contingent liability from its financial statements and notes.

C. include a description in the notes to the financial statements

D. record the amount of the liability times the probability of its occurrence

Reference no: EM131296146

Questions Cloud

Cash flow statement categories : Cash flow statement categories. Classify the transactions into the best of these five categories. Exchange of furniture for office equipment. Purchase of treasury stock. Decrease in accounts payable during the year.

Differences in culture-social values-political systems : How do differences in culture, social values, political systems, technology and economic systems impact mergers/acquisitions in this global environmental?

What is the maximum federal cost recovery deduction : LRRR Corporation, a calendar year C corporation, purchased and placed in service the following new assets on the following dates: What is the maximum federal cost recovery deduction LRRR Corporation may take on the assets listed above in 2016? Please..

Contingent liability can be reasonably estimated : When the amount of a contingent liability can be reasonably estimated and its likehood is possible but not probable, the company should:

Levels of sales is in the operating profit area : For the coming year, Loudermilk Inc. anticipates fixed costs of $600,000, a unit variable cost of $75, and a unit selling price of $125. The maximum sales within the relevant range are $2,500,000. Construct a cost-volume-profit chart on a sheet of pa..

Differences in income for financial statement-tax purposes : Davo Inc. began operations in January 2013. For certain of its property sales, Davo recognizes income in the period of sale for financial reporting purposes. However, for income tax purposes, Davo recognizes income when it collects cash from the buye..

Journal entry to record depreciation expense for equipment : Hearts Inc. acquired the following assets in January 2012. The equipment has been depreciated using the double-declining balance method for the first 2 years for financial reporting purposes. Prepare the general journal entry to record depreciation e..

Loss is disallowed due to her tax basis or at-risk amount : Sue invested $5,000 in the ABC General Partnership and received a 10 percent interest in the partnership. The partnership had $40,000 of unsecured debt. Sue is allocated a 10 percent share of the debt resulting in a tax basis of $9,000 and at risk am..

User Account

All Pages