M351 Notes-Day 3 Cur Liab

M351 Notes-Day 3 Cur Liab - M351 Notes, Class 3: Current...

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M351 Notes, Class 3: Current Liabilities and Contingencies, pp. 651-668 A. Gain Contingency: only tax loss carryforwards are recognized; other gain contingencies on page 651. 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 —the future event or events confirming the loss is/are more likely than remote but less likely than probable c. Remote —the possibility is slight that the future event or events confirming the loss will occur 2. When the contingent loss is probable and reasonably estimable , the company should recognize (expense or loss and payable) the expected amount of the loss. Disclosure in the notes to the financial statement may also be prudent. When the contingent loss is reasonably possible
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M351 Notes-Day 3 Cur Liab - M351 Notes, Class 3: Current...

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