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7252569-MIdterm-1 (dragged) 8 - Kieso Weygandt Warfield...

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Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Eighth Canadian Edition 13-9 a. Information available prior to the issuance of the financial statements indicates that it is likely that a future event will confirm that an asset has been impaired or a liability incurred as of the date of the financial statements, and b. The amount of the loss can be reasonably estimated. Neither the exact payee nor the exact date payable need be known to record a liability. What must be known is whether it is likely that a liability has been incurred. Litigation, Claims, and Assessments 37. When a company is threatened by legal action ( litigation, claims, and assessments ), the recording of a liability will depend upon certain factors. Among the more prevalent are a) the time period in which the underlying cause for action occurred, b) the probability of an unfavourable outcome, and c) the ability to make a reasonable estimate of the amount of loss.
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