MGAB01H3 Lecture : Estimated Liabilities

59 views1 pages
10 Nov 2010
School
Course
Professor
azizs2026mac and 38565 others unlocked
MGAB01H3 Full Course Notes
16
MGAB01H3 Full Course Notes
Verified Note
16 documents

Document Summary

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. 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. 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. A contingency exists when there is uncertainty about the outcome. Although contingent receivables exist, contingent liabilities are far more common. An example would be the outcome of a lawsuit. If the lawsuit is lost, there will be liabilities to pay.

Get access

Grade+
$40 USD/m
Billed monthly
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers

Related Documents

Related Questions