ACCT 209 Lecture Notes - Lecture 11: Retained Earnings, Financial Statement, Macrs

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October 22, 2015-- continued of unit 2, on test 3: Contingent liabilities: possible liability that is based on the unknown outcome of some evaluation; in essence, it"s a maybe liability o o. Example: a lawsuit we don"t know what the exact outcome will be. Maybe we"re liable or negligent and have to pay, but maybe we win the case. Example: guarantees of debt happens in business, i have a company and another company comes up with a product that i want to sell at my company. But they"re new and don"t have the means to produce very much stuff. So, i tell the bank that if they don"t pay for all the production, i"ll cover the debt. If the loss/liability is 1) probable and amount can be 2) estimated, we recognize the loss (show loss on income statement & liability on balance sheet)

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