M5 - M2 - Contingencies and Commitments

Question 1

__________ are existing conditions whose outcome depends on some future event or occurrence.

Answer 1

Contingencies

Question 2

The three categories of contingencies are ___________

Answer 2

1) probable, 2) reasonably possible, and 3) remote.

Question 3

A ________ involves a possible future loss whose existence is proved by subsequent events.

Answer 3

loss contingency

Question 4

A _________ is a claim or right to receive assets whose existence is uncertain but may become
valid upon the occurrence of future events.

Answer 4

gain contingency

Question 5

__________ that are probable are not accrued but are disclosed.

Answer 5

Gain contingencies

Question 6

__________ that are probable and can be reasonably estimated must be accrued.

Answer 6

Loss contingencies

Question 7

For loss contingencies - If a range of losses is given, the ________ is accrued.

Answer 7

best estimate of the loss

Question 8

For loss contingencies -if no best estimate can be made, the ________ is accrued and the remaining amount is disclosed in a footnote.

Answer 8

minimum amount

Question 9

For Loss contingencies - If no best estimate can be made, the minimum amount is accrued and the remaining amount is ________________.

Answer 9

disclosed in a footnote

Question 10

The __________ of a loss contingency that is reasonably possible is disclosed in the footnotes and is not accrued.

Answer 10

nature and amount (range)

Question 11

________ contingencies are generally ignored. Remote contingencies that are guarantees must be disclosed.

Answer 11

Remote

Question 12

_________contigency is disclosed in the footnotes and is not accrued.

Answer 12

Reasonably possible

Question 13

____________ are loss contingencies that are generally accrued by the entity as the expected amounts are probable and can be reasonably estimated.

Answer 13

Premiums and warranties