BU127 Study Guide - Final Guide: Cash Flow Statement, Contingent Liability, Cash Flow
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BU127 Full Course Notes
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When a contingent liability can be estimated and is probable, the company should include a description in the footnotes to the financial statements. When a company encounters a contingent liability that is remote in likelihood, the company should omit the info from its statements and footnotes. If gross salaries are 000, and it withholds for income taxes and for ei, the journal entry is credit to cash for . Cost principle: all reasonable and necessary costs of acquiring and preparing an asset are recorded. Depreciation: to match the cost of the asset to the period in which it generates revenue. Company records an asset impairment loss when net book value > expected future cash flows for asset. Asset impairment loss lowers assets, se and net income. In recording the acquisition cost of an entire business, goodwill is recorded as the excess of cost over the fair market value of identifiable assets.