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May 4, 2023 at 11:36 am
Thank you for the lecture If the accident happened after the year end why do we show it at all on the statements- it should be on next years statements?
John Moffat says
May 4, 2023 at 5:27 pm
If it happened after the year end, then yes it will be on next years statement. I do not say differently in the lecture 🙂
May 21, 2023 at 3:46 pm
but you do say that we will attach a note to last years statement?
May 21, 2023 at 6:52 pm
Yes, we will disclose it by way of a note if the amount involved is material.
October 9, 2023 at 8:24 pm
John, I’m interested in how we classify and treat guarantees and warranties. The probability of product failure giving rise to a claim could be less than 2%, but the volume of sales might make at least one claim per year, virtually certain.
Let’s say we allow a provision, based upon the expected claims in the year, does this liability ‘behave’ in the same way as, E.g. a provision for bad and doubtful debts? Thank you.
October 9, 2023 at 8:39 pm
Ah… No need to worry, I see now the warranty case may be treated as an allowance, and not a provision. Back to FR!
May 25, 2022 at 8:41 pm
Dear sir, First of all thank you for helping students like us.
My understanding of contingent liability is that if obligation is probable then we should recognize it the financial statement. If obligation is possible then disclose it in the financial statements by way of a note. and if obligation is remote, do nothing.
Is my understanding is correct, if not please specify the correct treatment.
Thanking you in anticipation.
May 26, 2022 at 6:37 am
It is correct 🙂
May 28, 2022 at 4:29 pm
Thank you very much sir for your prompt reply, iam really thankful for this but by listening to ur lecture i came to the conclusion that if accident happen before the year we will treat the contingent liability like provision but if the accident happens after the year end and the obligation to pay is probable or possible we will write a note and if its remote we will do nothing.
Am i correct please explain
May 29, 2022 at 7:23 am
June 13, 2022 at 1:07 am
Thank you very much for this wonderful help that you offer to us. I feel good listening to your lectures and it makes me understand what I want to know.
June 13, 2022 at 7:25 am
Thank you for your comment 🙂
Thank you for your comment 🙂
January 1, 2022 at 9:42 pm
Hi sir and thank you for all lessons!!!
if the accident happens after the year end why do we even consider showing it in THIS YEAR statements? why not simply leave it for next years statement
November 11, 2020 at 6:24 pm
Sir, shouldn’t probable – possible – and remote tests be done only for contingent liabilities/assets; as the provision is certainly a liability and will have to be paid ?
I am somewhat confused because I find these tests mentioned for Provision – whose payment is not contingent (dependent). Only the time and amount is uncertain. But it will be paid and recorded.
March 14, 2022 at 11:53 pm
I was thinking this too. I went to the BPP text and there is a note under the contingency learning section that says ” If an obligation is probable, it is not a contingent liability, instead a provision is needed and if it is remote, it requires no disclosure. ”
So my understanding is that Probable falls under Provisions, but Possible and Remote falls under Contingent Liability.
Hope this helps.
May 27, 2020 at 11:36 am
Really good resources. Thank you
May 27, 2020 at 2:37 pm
April 6, 2020 at 2:55 pm
About the contingent liability, we have to write a note if the accident takes place after the current year. I want to know how long after the end of the year we’ll have to write a note in the current year’s financial statement?
January 1, 2020 at 5:03 am
In contingent asset example in court case if we lose case we won’t receive money ? Right It’s not clear video sound
April 2, 2020 at 10:01 am
Yes, that’s right.
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