136B Notes 1_25_11

136B Notes 1_25_11 - 1/25/2011 136B Lecure Notes Contingent...

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1/25/2011 136B Lecure Notes Contingent Liabilities *From loss contingencies (ie: lawsuits) >Accrue if probable and estimable >F/N disclosure if loss is at least reasonably possible *Don’t Accrue for general business risks. >don’t accrue for potential losesses when a co. is self insured. (unless there's been a specific event that has occurred Warranties *when inseperable part of sale, use "expense warranty approach" >Accrue warranty expense and related liability in the period of the related sale, if its probable warrant costs will be incurred and amount is estimable. Premiums *Company issues coupons or gives out something such as a prize in a cereal box… *Stimulate sales by giving yo something later from buying their product *Accrue an expnse and liability for estimated premiums (whether a cash rebate or something where you save 10 pp seals and then redeem for a full product, etc.) to be distributed (if probable and estimable ). *Accrue in the period of the related sale… same as the procedure for warranties
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136B Notes 1_25_11 - 1/25/2011 136B Lecure Notes Contingent...

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