After Reading About Contingencies in Her Text, an Introductory Accounting

question 73

Essay

After reading about contingencies in her text, an introductory accounting student believes that such items should never be recorded.
Instructions
Explain what criteria must be met before a contingent liability is recorded on the financial statements.

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Definitions:

Co-optation

A strategy by which a group incorporates individuals from another, often oppositional group, to reduce threats or to gain their perspectives, sometimes diluting the original group's goals.

Coercion

The practice of forcing another party to act in an involuntary manner by use of threats, intimidation, or some other form of pressure or force.

Negotiation

The process by which parties with differing interests and objectives discuss an issue in an attempt to reach a mutually acceptable agreement.

Labor Unions

Organizations that represent the collective interests of workers in negotiations with employers over wages, benefits, and working conditions.