Purchase Solution

Accrual of a loss contingency: What is required?

Not what you're looking for?

Ask Custom Question

The two basic requirements for the accrual of a loss contingency are supported by several basic concepts of accounting. Four of these concepts are periodicity (time periods), measurement, objectivity, and relevance.

Discuss how the two basic requirements for accrual of a loss contingency relate to the four concepts listed above.

Response is 285 words of original commentary.

Attachments
Purchase this Solution
Solution Summary

Response is 285 words of original commentary. Four main concepts are described and discussed in everyday language suitable for novice to intermediate.

Solution Preview

Response is 285 words of original commentary. Please re-word and add your own thoughts prior to submitting.

----------------------

The two basic requirements to accrue a loss is that it be probable that the loss is going to occur and reasonably able to be estimated. Here is how these relate to the conceptual framework:

Periodicity - This concept is about timeliness. In other words, giving the information periodically so that decision makers ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Basics of corporate finance

These questions will test you on your knowledge of finance.

View More Free Quizzes
Related BrainMass Solutions

  • Requirements for Accrual Loss Contingency

    172025 Requirements for Accrual of a Loss Contingency The two basic requirements for the accrual of a loss contingency are supported by several basic concepts of accounting.

  • Economic Consequences and Loss Contingency

    C) If one or both conditions for accrual of a loss contingency are not met and the loss contingency is classified as probable or reasonably possible, the financial statement disclosure of the loss contingency is required.

  • Current Liabilities and Contingencies

    A colleague points out that, in practice, accrual of a loss contingency for unsettled litigation is rare.

  • This posting addresses the presentation of deferred taxes.

    for book purposes, of estimated loss contingency from pending lawsuit that is expected to be settled in 2011.

  • Discuss contingencies and how they are reported on financial

    The loss contingency is reported on the financial statements through disclosure. A disclosure is made of the loss contingency accrual.

  • Litigation Damages Accrual

    The standard specifically reads, "An estimated loss from a loss contingency shall be accrued by a charge to income if both of the following conditions are met: Information available prior to issuance of the financial statements indicates that it is probable

  • Contingency Loss Reporting

    This solution discusses what a loss contingency is, how it is computed, and why it is reported.

  • Accounting treatment and disclosures

    as a loss contingency for 2003 and so there would be no accrual of liability and so no impact on the income statement and the balance sheet.

  • GAAP gain and loss contingencies

    334492 GAAP require loss contingencies to be accrued when known; disallows accrual of gains Generally accepted accounting principles (GAAP) require loss contingencies to be accrued in the period the contingency becomes known.

View More Related Solutions