Question

Examine Note 23 to Canadian Tire's financial statements.
a. What is a contingent liability? How are contingent liabilities accounted for?
b. Explain the information in the first paragraph of the note. Do you find this information useful? Explain. Why do you think the information is provided in this very general way?
c. Describe the situation in the second paragraph of Note 23. What would the impact on the financial statements be had the $24.4 million referred to been accrued on the financial statements? How would it affect you as a prospective investor that the amount wasn't accrued, provided that it was disclosed in the notes? (Note: "The Bank" referred to in the note is the Canadian Tire bank, which is owned by Canadian Tire.)



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  • CreatedFebruary 26, 2015
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