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Two forms of estimated liabilities (IAS 37)
-Provisions (liabilities which are uncertain in timing or amount)
-Contingent Liabilites (possible obligation where either the amount cannot be reliably measured or the outflow is not probable)
A Provision would be recorded as a normal liability however it would be measured at the Present Value of the best estimate required to settle the obligation
(also requires substantial note disclosure) Note: Will result in defered tax!
A Contingent liability will result in only note disclosure- and thus will have no effect on the quantintative aspect of the financial statments.
What else can I help you with?
How do negative numbers impact financial statements in accounting?
Negative numbers in accounting can impact financial statements by representing losses, expenses, or liabilities. They can affect the overall profitability and financial health of a company, as well as influence key financial ratios and performance indicators.
How might changing one of the financial statements affect the other financial statements?
How might changing one of the financial statements affect the other financial statements?
Why are the notes important for understanding an organization's financial statement?
The notes to financial statements provide essential context and details that enhance the understanding of the numbers presented in the main statements. They explain accounting policies, assumptions, and methodologies used, offer insights into contingent liabilities, and disclose risks and uncertainties that may affect the organization's financial position. Additionally, these notes can highlight significant events or transactions that are not immediately apparent from the numbers alone, thereby providing a more comprehensive view of the organization's financial health. Overall, they are crucial for stakeholders to make informed decisions.
Where do you list pending law suits in financial statement?
A pending lawsuit would not affect the financial statements. However, if the company is paying extra for lawyer fees and other expenses related to the lawsuit, then these expenses would be recorded in expenses. The lawsuit would only affect the financial statements if a settlement is made and the company has to pay, another expense.
Do dividends affect assets liabilities owners equity or neither?
liabilities
Define financial system?
Financial system is the processes and procedures used by a firm's management to exercise financial control and accountability. These measures include ecording, verification and timely reporting of transactions that affect revenues, expenditures, assets and liabilities.
Does The cash basis of accounting commonly results in financial statements that are not comparable from period to period?
Cash is the main transaction in an accounting , it will affect from period to period in financial statement
What is an external auditors report?
external auditors focus primarily on controls that affect financial reporting. External auditors have a responsibility to report internal control weaknesses (as well as reportable conditions about internal control)
How does assets and liabilities affect profit margins?
Assets and liabilities directly influence a company's profit margins by impacting its overall financial health and operational efficiency. High levels of assets can indicate strong resource availability for generating revenue, while excessive liabilities can lead to increased interest payments and financial strain, reducing net profit. This balance affects how much profit a company retains from its revenues, ultimately shaping its profit margins. Efficient management of both assets and liabilities is crucial for maintaining healthy margins.
How does Mr Blowhard's scheme affect the amount of income that the company would otherwise repot NT its financial statements and how doe the scheme affect the company's balance sheet?
how does mr blowhard's scheme affect the amount of income that the company would otherwise report nt it's financial statement and how does the scheme affect the company
What items affect owner's equity?
assets and liabilities
Can you provide an example of how accounting for stock options impacts a company's financial statements?
When a company grants stock options to employees, it must account for this as an expense on its financial statements. This expense reduces the company's reported net income and earnings per share, which can affect how investors perceive the company's profitability.
