Unformatted text preview: Kirk's $5,000,000 comprehensive public liability policy contains a $400,000 deductible clause. In Kirk's December 31, 2010 financial statements, for which the auditor's fieldwork was completed in April 2011, how should this casualty be reported? Your Answer: As a note disclosing a possible liability of $4,000,000. As an accrued liability of $400,000. As a note disclosing a possible liability of $400,000. CORRECT No note disclosure of accrual is required for 2010 because the event occurred in 2011. Instructor Explanation: As a concept, this contingent liability is possible to occur. Thus, note disclosure is required. Chapter 13. Points Received...
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- Spring '10
- Law, Kirk, Instructor Explanation, Kirk Co., note disclosure