Class3-CurrLiab2 - M351 Notes, Class 3: Current Liabilities...

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M351 Notes, Class 3: Current Liabilities and Contingencies, pp. 631-647 Today’s topics When does a company do a journal entry for a situation where uncertainty exists about the transfer of cash or other assets that will be required to settle the obligation (a contingency)? Warrantees sold with a product vs. sold separately from the product (recall lessons on matching from allowance for doubtful accounts) Premiums/Coupons Environmental liabilities - asset retirement obligations Presentation and Ratios A. Gain Contingency: only tax loss carryforward are recognized; other gain contingencies on page 632. B. Loss Contingency: an event that may produce a future payable/payment has occurred but one or more future events are required to confirm or remove the loss contingency. 1. GAAP uses three terms to identify the likelihood that a loss contingency will be confirmed: a. Probable —the future event or events confirming the loss is/are likely to occur b. Reasonably possible
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This note was uploaded on 12/04/2009 for the course MGMT 351 taught by Professor Staff during the Spring '08 term at Purdue University-West Lafayette.

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Class3-CurrLiab2 - M351 Notes, Class 3: Current Liabilities...

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