A Contingent Liability of an Acquiree

question 18

Multiple Choice

A contingent liability of an acquiree

• A)​refers to future consideration due that is part of the acquisition agreement.
• B)​is recorded when it is probable that future events will confirm its existence.
• C)​may be recorded beyond the measurement period under certain circumstances.
• D)​should be recorded even if the amount cannot be reasonably estimated.

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Definitions:

Internal Failure Cost

Costs incurred due to defects in goods or services before they are delivered to the customer, part of quality management expenses.

Quality Cost Report

A financial report detailing the costs associated with ensuring and maintaining the quality of products or services, including prevention, appraisal, and failure costs.

Appraisal Cost

Costs incurred to ensure that a product or service meets quality standards, including testing, inspections, and certifications.

Quality Cost Report

A financial report that details the costs associated with preventing, detecting, and dealing with defects in products.