7252569-MIdterm-1 (dragged) 14

7252569-MIdterm-1 (dragged) 14 - about the risks that are...

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Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Eighth Canadian Edition 13-15 3. Litigations, Claims, and Assessments. The following factors should be considered: a. The period in which the underlying cause for action occurred. b. The degree of probability of an unfavourable outcome. c. The ability to make a reasonable estimate of the amount of the loss. 4. Companies are required under Section 3060.39 of the CICA Handbook to accrue future removal and site restoration costs. This accrual is subject to the measurability of the estimated future costs. 5. Risk of loss due to lack of insurance coverage. The absence of insurance does not mean that a liability has been incurred at the date of the financial statements. 6. Guarantees: CICA Handbook Guideline AcG-14 “Disclosure of Guarantees” (effective 2003) requires expanded disclosure by all guarantors about obligations and particularly
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Unformatted text preview: about the risks that are assumed as a result of issuing guarantees. TEACHING TIP The accounting treatment of loss contingencies can be summarized with the aid of Illustration 13-1. G. Financial Statement Disclosure of Current Liabilities 1. The current liability accounts are generally the first classification in the equity section of the balance sheet. 2. Current liabilities are frequently listed in order of maturity, according to amount, or in order of liquidation preference. 3. Areas that warrant additional disclosure are: a. Assets pledged as collateral for secured liabilities. b. Purchase commitments. c. Short-term obligations expected to be refinanced. d. Loss contingencies for which a liability has not been recorded....
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