Identify Whether Each of the Below Items Would Be a Known

question 69

Essay

Identify whether each of the below items would be a known, estimated, or contingent liability:
1. A manufacturing company offers a one-year warranty on their product.
2. A lawsuit has been filed against Voltage Energy, a private company, for polluting a creek in a local community. The amount is estimated at $125,000 and there is a 70%-95% likelihood of the obligation occurring.
3. ABC Co. purchased machinery for $125,000 paying $75,000 in cash and borrowing the remainder by signing a one-year 5% note payable.

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Definitions:

Mercury

Mercury is a chemical element with the symbol Hg and atomic number 80, known for being the only metallic element that is liquid at standard conditions for temperature and pressure.

Fetal Period

The stage of human development in the womb from the end of the embryonic stage until birth.

Pregnant

The state of carrying a developing embryo or fetus within the female body, typically lasting around nine months in humans.

Drinking

The act of consuming liquids, often specifically referring to the consumption of alcoholic beverages.