y vnunyeUES, This question deals with probabilities and estimations of potential litigation claims. In Accounting Standards...
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y vnunyeUES, This question deals with probabilities and estimations of potential litigation claims. In Accounting Standards Codification (ASC) 450 (formerly Statement of Financial Accounting Standard (SFAS) No. 5. "Accounting for Contingencles"), the Financial Accounting Standards Board (FASB) provides the standard for accruing and disclosing three categories of potential losses that can be reasonably estimated. Those categories reflect the contingent nature of those losses and the guiding criteria are organized around probability of outcomes classified as (1) probable, (2) reasonably possible, and (3) remote. The basis for this question is that the audit client is being sued for $500,000 for discriminatory hiring practices, Match the appropriate action with respect to each of the circumstances below. The lawyer stated that the dlient will probably lose and The auditor should ask the the amount of the loss could client to accrue the minimum be anywhere between $250,000 and $500,000, but most likely will lose $400,000. The client accrued a $250,000 contingent loss and disclosed the situation. of the range of $250,000 and disclose the contingency and the fact that the loss could be as much as $500,000. The lawyer stated that there is The auditor should ask the a remote chance that the client to adjust the accrual to client will lose. The client did $400,000. The disclosure should indicate the range and not accrue any contingent loss or disclose this situation. the amount actually accrued. The lawyer stated that the client will probably lose, and the amount of loss could be anywhere between $250,000 No action is necessary. The and $500,000, with no amount cdlient has properly handled within that range being more this. likely than another. The client disclosed this situation, but did not accrue a loss. The lawyer stated that there is a reasonable possibility that The auditor should ask the client to adjust the accrued the client wil| lose. The client loss to zero and to disclose the disclosed this situation and contingency. accrued a loss of $250,000. y vnunyeUES, This question deals with probabilities and estimations of potential litigation claims. In Accounting Standards Codification (ASC) 450 (formerly Statement of Financial Accounting Standard (SFAS) No. 5. "Accounting for Contingencles"), the Financial Accounting Standards Board (FASB) provides the standard for accruing and disclosing three categories of potential losses that can be reasonably estimated. Those categories reflect the contingent nature of those losses and the guiding criteria are organized around probability of outcomes classified as (1) probable, (2) reasonably possible, and (3) remote. The basis for this question is that the audit client is being sued for $500,000 for discriminatory hiring practices, Match the appropriate action with respect to each of the circumstances below. The lawyer stated that the dlient will probably lose and The auditor should ask the the amount of the loss could client to accrue the minimum be anywhere between $250,000 and $500,000, but most likely will lose $400,000. The client accrued a $250,000 contingent loss and disclosed the situation. of the range of $250,000 and disclose the contingency and the fact that the loss could be as much as $500,000. The lawyer stated that there is The auditor should ask the a remote chance that the client to adjust the accrual to client will lose. The client did $400,000. The disclosure should indicate the range and not accrue any contingent loss or disclose this situation. the amount actually accrued. The lawyer stated that the client will probably lose, and the amount of loss could be anywhere between $250,000 No action is necessary. The and $500,000, with no amount cdlient has properly handled within that range being more this. likely than another. The client disclosed this situation, but did not accrue a loss. The lawyer stated that there is a reasonable possibility that The auditor should ask the client to adjust the accrued the client wil| lose. The client loss to zero and to disclose the disclosed this situation and contingency. accrued a loss of $250,000.
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Answer 1 The auditor should ask the client to accrue the minimum of the range of 250000 and disclose the contingency and the fact that the loss could be as much as 500000 The accrual should be made in ... View the full answer
Related Book For
Artificial Intelligence A Modern Approach
ISBN: 978-0137903955
2nd Edition
Authors: Stuart J. Russell and Peter Norvig
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