Travis Dorso-Unit 5 - Problem 9.10-Contingent Liabilities...

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Problem 9.10-Contingent Liabilities 1) 2) "Contingent liabilities should be accrued and disclosed only when the event they depend on is probable and the amount can be reasonably estimated. The amount of a contingent liability is often an estimate made by experts both inside the firm and outside the firm"(Porter and Norton ,2009). Based on these criteria, only items a, d, and e should be recorded at year-end because the events depended on are probable and the amounts can be reasonably estimated. The lawsuit in item c should not be recorded but should be disclosed in the year-end financial statement because the event is reasonably probable, but legal counsel is unable to estimate the costs. The trademark infringement suit in item b should not be recorded or disclosed as a contingent liability. It is a contingent asset and should not be reported until the gain actually occurs
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10.5 - Financial Statement Impact of a Lease 1)- Five Year Amoritization Column 1 Column 2 Column 3 Column 4 Date Lease Payment Interest Expense Lease Obligation 8% 12/31/2003 $113,000 12/30/2004 $28,300 $9,040 $19,260 $93,740 12/30/2005 $28,300 $7,499 $20,801 $72,939 12/30/2006 $28,300 $5,835
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Travis Dorso-Unit 5 - Problem 9.10-Contingent Liabilities...

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