When the Amount of a Contingent Liability Cannot Be Estimated

question 122

Multiple Choice

When the amount of a contingent liability cannot be estimated but its likelihood is probable, the company should:

• A) include a description in the footnotes to the financial statements.
• B) record the amount of the liability times the probability of its occurrence.
• C) record the amount of the liability as a long-term liability on the balance sheet.
• D) omit the information about the contingent liability from its financial statements and footnotes.

Recognize the conditions under which a contract could be ended by performance, agreement, or breach.

Understand the principles surrounding substantial performance and the conditions precedent and subsequent in contract law.

Understand the concept of consumer sovereignty and its role in determining what is produced in the economy.

Analyze the importance of government intervention in market economies, especially in cases where private producers' resource costs do not reflect the full societal costs.

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Definitions:

UCC

Refers to the Uniform Commercial Code, a comprehensive set of laws governing commercial transactions in the United States.

Destination Contract

A contract specifying that the seller will bear the cost and risk of the goods until they are delivered to a specific location.

Plywood

A type of engineered wood product made by gluing together several thin layers or plies of wood veneer.

Breach Of Warranty

occurs when a promised statement of fact about a product or service is not true or is violated.