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Unformatted text preview: and disclose it in its books of account by debiting the product warranty charges account (expense) and crediting product warranty payable account (liability). In the case of product Yellow, since it a new product for which warranty charges which may be incurred cannot be estimated reasonably, but at the same time are likely to be incurred, it should disclose this contingent liability in its notes to the financial statements. Contingent liabilities are accounted for and disclosed so that the financial statements reveal the true and fair picture....
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This note was uploaded on 10/03/2011 for the course ACCOUNTING 103 taught by Professor Ngo during the Spring '11 term at University of California, Berkeley.
- Spring '11