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

question 24

Essay

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

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Definitions:

Dishonored

A term commonly used in banking and finance referring to a cheque or payment that has been refused or cannot be processed.

Drawee

The party that must obey an order. In the context of banking, the drawee is the bank that must pay the funds ordered by a customer’s check.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money to a specified person, which can be transferred by endorsement or delivery.

Dishonored

A term used to describe a financial instrument, such as a check or promissory note, that has been refused acceptance or payment.