Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 13: Q18Q (page 691)

Distinguish between a determinable current liability and a contingent liability. Give two examples of each type.

Short Answer

Expert verified

Determining current liability is a near debt obligation that is measured exactly, while contingent liability is a liability that may or may not occur contingent on the happening of an uncertain future event.

Step by step solution

01

Step 1- Meaning of Determinable Current Liability

Determinable current liabilities are those liabilities that are determined to be payable within period of one year

Example- Accounts payable, Short term loan, etc

02

Step 3- Comparing and differentiating Determinable current liability and contingent liability

BASIS

Determinable current liability

Contingent liability

Definition

Obligations that are measured exactly

Liability that may occur depending upon uncertain future event

Accountability

Under current liabilities

Disclosed as notes usually but loss/expense if any is accounted as part of prudence

Measurability

It can be measured exactly

It may or may not be estimated since the happening of the event is uncertain

Examples

Accounts payable, commercial paper, dividends payable

Potential Lawsuits, product warranties, pending investigations

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Discuss the accounting treatment or disclosure that should be accorded a declared but unpaid cash dividend, an accumulated but undeclared dividend on cumulative preferred stock, and a stock dividend distributable.

Explain the accounting for an assurance-type warranty.

Question: What factors must be considered in determining whether or not to record a liability for pending litigation? For threatened litigation?

Question: At what amount should trading, available-for-sale, and held-to-maturity debt securities be reported on the balance sheet?

Which types of investments are valued at amortized cost? Explain the rationale for this accounting.
See all solutions

Recommended explanations on Business Studies Textbooks

Organizational Behavior

Read Explanation

Corporate Finance

Read Explanation

Intermediate Accounting

Read Explanation

Influences On Business

Read Explanation

Change Management

Read Explanation

Business Case Studies

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free