Estimated Liabilities

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Department
Financial Accounting
Course
MGAB01H3
Professor
Liang Chen
Semester
Fall

Description
Estimated Liabilities These are obligations that exists but whose amount and timing are uncertain. However, the uncertainty is not so great that the company cannot reasonably estimate the liability Property Taxes Until the bill is received for property taxes, it must be estimated and accrued. Once the bill is received, the annual expense must be adjusted for the portion already accrued Product Warranties The estimated cost of honouring product warranty contracts should be recognized as an expense in the period in which the sale occurs. The estimated amount should be debited to warranty expense, with a credit to warranty liability. The entry to record the repair costs would be a debit to warranty liability and a credit to repair parts inventory Contingent Liabilities A contingency exists when there is uncertainty about the outcome. Although contingent receivables exist, contingent liabil
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