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UGBA 102A Lecture Notes - Lecture 9: European Route E94, Contingent Liability, Current LiabilityExam


Department
Business Administration Undergraduate Program
Course Code
UGBA 102A
Professor
Briginshaw
Study Guide
Final

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Kousha Modanlou
UGBA 102A
October 26, 2018
Ch 9: Page 488 Q 9,13; Page 488-489 MC 4,5; Page 491, 492 E9-1; E9-4
Page 488
Q9: A contingent liability is a potential liability that has arisen as the result of a past event. Some
future event has to occur for it to be a definitive liability that is recorded on a company’s balance
sheet.
Q13: PV= C/(1+i)^n
PV= 8000/ (1+0.1)^10= 3084.35
The contract’s present value is $3084.35
Page 488-489
MC4: C
MC5: C
Page 491, 492
E9-1:
1. Current liabilities: $56,000 + $14,000 + $3000 + $7000 + $7000 + $3600 + $12,000
+$400= $103,000
Current assets= total assets - noncurrent assets= $530,000 - $362,000= $168,000
Working capital= $168,000 = $103,000= $65,000
Working capital is significant because it demonstrates how effective a company is in its
day-to-day operations.
2. If the company reported $250,000 worth of its contingent liabilities, the computation
would maintain the same values.
E9-4:
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