This post addresses estimated current liabilities.
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Would you be able to describe the two types of current liabilities that must be estimated and why this is so? How are the financial statements affected if they are not estimated?
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Solution Summary
The solution discusses two types of current liabilities that must be estimated and also addresses how the financial statements are affected if they are not estimated.
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The warranty liabilities are estimated based on a percentage of sales in the accounting period and are shown on the balance sheet. By showing the estimated warranty expenses on the balance sheet, it increases the transparency of the financial statements because the amounts are shown. Most companies determine the amount based on historical ...
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