LSU ACCT 3222 - Chapter 14 Final Exam ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Orig exam with correct answers ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
an existing condition or situation involving uncertainty as to
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
possible loss that will ultimately be resolved when one or more ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
future events occur or fail to occur - correct answers✔✔loss
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
contingency
3 categories of the likelihood of loss - correct answers✔✔1.
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Probably ||\\||\\
2. Reasonably possible
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3. Remote ||\\||\\
What is the accounting treatment for loss contingencies if
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
probable and reasonably estimated? - correct ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers✔✔record an adjusting entry to accrue the loss and ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
disclose in FS notes ||\\||\\ ||\\||\\ ||\\||\\
, What is the accounting treatment for loss contingencies if
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
reasonably possible (50/50 chance)? - correct ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers✔✔disclose only ||\\||\\
What is the accounting treatment for loss contingencies if
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
remote? - correct answers✔✔do nothing ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
(usually still do a blanket disclosure in notes) ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
What is the strongest audit procedure for contingent liabilities?
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
And what assertion does it cover?
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
When is it sent? - correct answers✔✔obtain legal letter - the
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
existence of uncertainties arising from litigation, claims, and ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
assessments ||\\||\\
sent near the end of fieldwork
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Audit procedures for contingent liabilities: - correct
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers✔✔- BOD minutes ||\\||\\ ||\\||\\ ||\\||\\
- review contracts, loan agreements, leases, etc
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
- review income tax liab, tax returns, IRS correspondence
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
- confirm w financial institutions regarding guarantees
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
- **obtain legal letter **
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Orig exam with correct answers ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
an existing condition or situation involving uncertainty as to
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
possible loss that will ultimately be resolved when one or more ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
future events occur or fail to occur - correct answers✔✔loss
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
contingency
3 categories of the likelihood of loss - correct answers✔✔1.
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Probably ||\\||\\
2. Reasonably possible
||\\||\\ ||\\||\\ ||\\||\\
3. Remote ||\\||\\
What is the accounting treatment for loss contingencies if
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
probable and reasonably estimated? - correct ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers✔✔record an adjusting entry to accrue the loss and ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
disclose in FS notes ||\\||\\ ||\\||\\ ||\\||\\
, What is the accounting treatment for loss contingencies if
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
reasonably possible (50/50 chance)? - correct ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers✔✔disclose only ||\\||\\
What is the accounting treatment for loss contingencies if
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
remote? - correct answers✔✔do nothing ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
(usually still do a blanket disclosure in notes) ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
What is the strongest audit procedure for contingent liabilities?
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
And what assertion does it cover?
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
When is it sent? - correct answers✔✔obtain legal letter - the
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
existence of uncertainties arising from litigation, claims, and ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
assessments ||\\||\\
sent near the end of fieldwork
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Audit procedures for contingent liabilities: - correct
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers✔✔- BOD minutes ||\\||\\ ||\\||\\ ||\\||\\
- review contracts, loan agreements, leases, etc
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
- review income tax liab, tax returns, IRS correspondence
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
- confirm w financial institutions regarding guarantees
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
- **obtain legal letter **
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
