Disscusion questions

Disscusion questions.

I’m trying to learn for my Accounting class and I’m stuck. Can you help?

Respond to the following in a minimum of 100 words:

Monica
Kho

A contingency liability is basically a plan “B” that a company creates to accommodate any liability risks when faced with a litigation situation. When it is more probable that the company is not able to win the lawsuit, the company will make a plan that will ensure the company’s survival. So that can entail the company selling some of its assets to pay for the litigation fees. In these types of situations, an auditor’s job is to help the company create that plan. How they would do it is by ensuring there is little misstatements in the financial reports, the company is disclosing its changes in financial statements, and it is accommodating the lawsuit legally and fairly.

Letters from the client’s lawyers are very crucial documents in creating the contingency plan for the litigations because it provides all the necessary facts of whether the company will win the lawsuit, how much the lawsuit will cost so the company can account for it in its financial statements, and is the company able to recover from the lawsuit. Unfortunately, lawyers are very reluctant in providing auditors with the documents because they are afraid it may sway the client in the wrong direction, intentionally or unintentionally.

Post Balance Sheet Review is what it sounds like. Any transactions created after the balance sheet date is reviewed to see whether the transactions are fairly presented and disclosed in the current period statements.

Now how all three terms correlate to Build-A-Bear Workshop is if the company were to get involved in a lawsuit, the company will need create a contingency plan for the liability risk. The auditors involved will then make sure that Build-A-Bear Workshop is correctly stating its financial statements. How auditors can check the company’s work is by using the letters from the company’s lawyers to compare and properly evaluate the type of risk the company is taking. Once everything is compared and confirmed, auditors can analyze the post-transactions and see if any of the transactions is pertinent to the lawsuit in any way, shape, or form.

Ereny
Mekhael

A contingent liability is a potential future obligation to an outside party for an unknown amount resulting from activities that have already taken place. Accounting standards use two primary approaches in dealing with uncertainty in loss contingencies a fair value and a probability threshold approach.

Auditors are especially concerned about certain contingent liabilities:

• Pending litigation for patent infringement, product liability, or other actions

• Income tax disputes

• Product warranties

• Notes receivable discounted

• Guarantees of obligations of others

• Unused balances of outstanding letters of credit

The auditor’s primary objectives in verifying contingent liabilities are:

· • Evaluate the accounting treatment of known contingent liabilities to determine whether management has properly classified the contingency (classification presentation and disclosure objective).

· • Identify to the extent practical any contingencies not already identified by management (completeness presentation and disclosure

The common audit procedures used to search for contingent liabilities are include : Inquire of management about the possibility of unrecorded contingencies, review current and previous years’ internal revenue agent reports for income tax settlements, review the minutes of directors’ and stockholders’ meetings for indications of lawsuits or other contingencies, analyze legal expense for the period under audit, obtain a letter from each major attorney performing legal services for the client, Rrview audit documentation, and examine letters of credit in force as of the balance sheet date and obtain a confirmation of the used and unused balances.

Disscusion questions

Order a unique copy of this paper
(550 words)

Approximate price: $22

Place Order
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.

Zero-plagiarism guarantee

The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.

Read more

Free-revision policy

The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.

Read more

Privacy policy

The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.

Read more

Fair-cooperation guarantee

By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.

Read more

Calculate the price

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
× WhatsApp us for help