Question

1. Cite and explain when a contingent loss should be shown on the financial statements. 2....

1. Cite and explain when a contingent loss should be shown on the financial statements.

2. Cite and explain the criteria to determine if an employer must accrue a liability for vacation pay.

3. Cite and explain GAAP’s statement about gain contingencies (should they be shown on the

financial statements and/or should they be disclosed in the notes to the financial statements).

4. Cite and explain the guidelines for reporting Other Comprehensive Income in shareholders’

equity.

5. Cite and explain the disclosure requirements for contingently convertible securities.

Homework Answers

Answer #1
1. Contingent loss is a liability that is likely to arise in the future as a result of an uncertain process. Accidental loss is recorded if contingency is possible and the amount of loss can be reasonably estimated. As long as both conditions are not met, the liability may be stated in the financial statements.
Liability based on the outcome of an uncertain process requires two actions to be taken before a report can be made in a financial statement. First, it is possible to estimate the value of contingent liability. If it is possible to estimate the value, the probability of realizing the loss needs to be more than 50%. The amount of eligible contingency loss is required to be recorded in the income statement as an expense and in the balance sheet as a liability.
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Cite (FASB) and explain when a contingent loss should be shown on the financial statements
1. Cite (FASB) and explain when a contingent loss should be shown on the financial statements
Financial Reporting and Analysis Assignment #1 Q1. What is IFRS? ? What is the IASB? ?...
Financial Reporting and Analysis Assignment #1 Q1. What is IFRS? ? What is the IASB? ? How widespread is the adoption of IFRS around the world? ? What is the possibility of the Securities and Exchange Commission substituting IFRS for GAAP? ? What are the advantages of converting to IFRS? ? What could be the disadvantages of converting to IFRS? ? What is the difference between convergence and adoption? ? When comparing IFRS and GAAP, what are some overall key...
The translation adjustment from translating a foreign subsidiary's financial statements should be shown as... A.) An...
The translation adjustment from translating a foreign subsidiary's financial statements should be shown as... A.) An asset or liability (depending on the balance) on the consolidated balance sheet. B.) A revenue or expense (depending on the balance) on the consolidated income statement. C.) A component of stockholders' equity on the consolidated balance sheet. D.) A component of cash flows from financing activities on the consolidated statement of cash flows. E.) an element of the notes that accompany the consolidated financial...
1.) Explain why the notes are an integral part of the financial statements 2.) Explain why...
1.) Explain why the notes are an integral part of the financial statements 2.) Explain why the characteristics of comparability and consistency are important in financial reporting 3.) Explain the differences between accounts payable, short-term debt, current maturities of long-term debt, accrued liabilities and unearned revenue.
Question 1. According to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, which of the following...
Question 1. According to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, which of the following should be provided for in the financial statements? Legal cases brought against a company Future operating losses Costs of an expected future restructuring of a company Onerous contracts Question 2. Ralph Co aquires 80% of Angus Co on 1 January 20X7 for $780,000. At this date the net assets of Angus Co had a book value of $720,000 and a fair value of $750,000....
Question 1. Which of the following are enhancing qualitive characteristics of financial statements according to the...
Question 1. Which of the following are enhancing qualitive characteristics of financial statements according to the Board's Conceptual Framework for Financial Reporting? 1 Understa ndablilty 2 Accuracy 3 Timeliness 4 Comparability (A) 1, 2, 3 and 4 (B) 2, 3 and 4 only (C) 1, 3 and 4 only (D)1, 2 and 3 only Question 2. In accordance with IAS 41 Agriculture, which of the following statements is correct? (A) A fruit tree is initially measured at cost (B) Dairy...
Question 1 (12 marks) a) Differentiate between the 'definition of assets' and the criteria for recognition...
Question 1 a) Differentiate between the 'definition of assets' and the criteria for recognition of assets' provided in the conceptual framework. b) If an asset is expensed in one financial year because future economic benefits were not deemed to be 'probable', can the same asset be reinstated in future periods if the benefits are subsequently assessed as probable? In this respect, does the ability to reinstate assets apply to all assets? Briefly explain. c) AASB 101 stipulates a number of...
Question 1 (12 marks) a) Differentiate between the 'definition of assets' and the criteria for recognition...
Question 1 a) Differentiate between the 'definition of assets' and the criteria for recognition of assets' provided in the conceptual framework. b) If an asset is expensed in one financial year because future economic benefits were not deemed to be 'probable', can the same asset be reinstated in future periods if the benefits are subsequently assessed as probable? In this respect, does the ability to reinstate assets apply to all assets? Briefly explain. c) AASB 101 stipulates a number of...
Question 1 If dividends are declared after the reporting period but before the financial statements are...
Question 1 If dividends are declared after the reporting period but before the financial statements are authorised for issue, the dividends are __________as a liability at the end of the reporting period because no obligation exists at that time. Such dividends are disclosed in the notes in accordance with AASB 101 Presentation of Financial Statements (AASB 110). not recognised recognised authorised not authorised 2 points Question 2 A share option will give the holder the right to acquire shares at...
The Volkswagen Group adopted International Accounting Standards (IAS, now International Financial Reporting, or IFRS) for its...
The Volkswagen Group adopted International Accounting Standards (IAS, now International Financial Reporting, or IFRS) for its 2001 fiscal year. The following is taken from Volkswagen’s 2001 annual report. It discusses major differences between the German Commercial Code (HGB) and IAS as they apply to Volkswagen. General: In 2001 VOLKSWAGEN AG has for the first time published its consolidated financial statements in accordance with International Accounting Standards (IAS) and the interpretations of the Standing Interpretations Committee (SIC). All mandatory International Accounting...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT