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    Contingent Liability and Unethical situation

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    What is an example of a situation that requires the establishment of a contingent liability? Why should a company establish a contingent liability? How does the establishment of a contingent liability impact earnings?

    What is an example of a potentially unethical accounting situation? Why is the situation unethical? How do ethics impact the financial results of a company?

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    https://brainmass.com/business/accounting-for-liabilities/contingent-liability-and-unethical-situation-132487

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    What is an example of a situation that requires the establishment of a contingent liability? Why should a company establish a contingent liability? How does the establishment of a contingent liability impact earnings?

    A contingent liability is a liability that is dependent on the occurrence of a future event.
    The FASB has defined the following terms in an attempt to define this range.

    Probable-the future event or events are likely to occur
    Reasonably possible-the chance of the future event or events occurring is more than remote but less than likely
    Remote-the chance of the future event or events occurring is slight

    A contingent liability should be established if the following two conditions are met.
    1. As of the ...

    Solution Summary

    The solution explains when a contingent liability is to be established and an example of a potentially unethical accounting situation.

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