Existing Claims Related to Product Warranties and Litigation as of December

question 1

Multiple Choice

Existing claims related to product warranties and litigation as of December 31, 2010, indicate that it is probable that a liability has been incurred.However, as of December 31, 2010, the amount of the obligation cannot be reasonably estimated.Based on these facts, an estimated loss contingency should be

• A)accrued
• B)disclosed but not accrued
• C)neither accrued nor disclosed
• D)classified as an appropriation of retained earnings

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Definitions:

MP3 Player Market

Refers to the commercial segment involved in the manufacturing and selling of digital audio players that play music and media stored in the MP3 format.

Relative Advantage

The degree to which a new product or service is perceived as better than existing alternatives by consumers.

System 1

Refers to the fast, instinctive, and emotional way of thinking, as opposed to the slower, more logical System 2.

Microsoft Windows

Microsoft Windows is a group of several proprietary graphical operating system families, developed and marketed by Microsoft.