If the Likelihood of a Future Event Is Probable and the Amounts

question 26

Essay

If the likelihood of a future event is probable and the amounts of the expense can be estimated,how should the company report the contingency?

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Definitions:

English Parliament

The legislative body of the United Kingdom, responsible for making and passing laws.

Act for the Prevention of Frauds and Perjuries

Historical legislation requiring certain contracts to be in writing and signed to prevent fraudulent claims and perjury.

Main-Purpose Rule

A legal principle holding that if the main purpose of a guarantor's promise to pay another's debt is to serve the guarantor's own interests, the promise does not need to be in writing to be enforceable.

Secondary Obligation

An obligation that arises only after a primary obligation has not been fulfilled, often seen in guarantor or surety arrangements.