F5/M2 Contingencies and Committments Flashcards
1
Q
Gain contingencies are not recognized in FS, only disclosed if highly probable
A
True
2
Q
(T/F): If a loss contingency is probable, record in FS
A
True;
If reasonably possible, disclose
3
Q
JE to record a loss contingency that is probable and reasonably estimatable
A
Dr: expense
Cr: liability
4
Q
(T/F): If the amount that is reasonably estimable is a range, use the lowest value under GAAP and the midpoint under IFRS
A
True
5
Q
(T/F): The cost of the premium is charged to sales in the periods that benefit from the offer
A
True
6
Q
JE to record outstanding premium liability
A
Dr: Premium Expense
Cr: Premium Liability
7
Q
The entire liability for the warranty should be accrued in the year of sale to match the cost with the corresponding revenue
A
True
