Question

tate whether you believe each of the liabilities listed below is determinable, estimable, or contingent.

1.		An automobile company recalled a particular car model because of a possible problem with the brakes. The company will pay to replace the brakes.		ContingentDeterminableEstimable
2.		A large retail store has a policy of refunding purchases to dissatisfied customers under a widely advertised "money-back, no questions asked" guarantee.		DeterminableContingentEstimable
3.		A manufacturer offers a three-year warranty at the time of sale.		EstimableDeterminableContingent
4.		To promote sales, a company offers prizes (such as a chance to win a trip) in return for a specific type of bottle cap.		EstimableContingentDeterminable
5.		A local community has filed suit against a chemical company for contamination of drinking water. The community is demanding compensation, and the amount is uncertain. The company is vigorously defending itself.

If you identify the liability as contingent in part (a), indicate if it should be recorded, disclosed, or neither recorded nor disclosed in the financial statements.

1.		An automobile company recalled a particular car model because of a possible problem with the brakes. The company will pay to replace the brakes.		DisclosedNot requiredRecordedNeither recorded nor disclosed
2.		A large retail store has a policy of refunding purchases to dissatisfied customers under a widely advertised "money-back, no questions asked" guarantee.		RecordedNot requiredDisclosedNeither recorded nor disclosed
3.		A manufacturer offers a three-year warranty at the time of sale.		Neither recorded nor disclosedDisclosedNot requiredRecorded
4.		To promote sales, a company offers prizes (such as a chance to win a trip) in return for a specific type of bottle cap.		Neither recorded nor disclosedDisclosedNot requiredRecorded
5.		A local community has filed suit against a chemical company for contamination of drinking water. The community is demanding compensation, and the amount is uncertain. The company is vigorously defending itself.		RecordedDisclosedNeither recorded nor disclosedNot required

Answer 1

1 a)determinable because company alredy know that there is problem in brakes

b) estimateable as company knows that they have to pay something inscheme of money back but not with certainity

C)estimateable as company in future have to incur some expenses on warranty

D)determinable because company already knows the expense on prize offered

E)contingent as company may either wien the case or lose the case

2)only e part is contingent liablity and it should be disclosed in the footnote of balance