ACC 304 Course Great Wisdom / tutorialrank.com ACC 304 Course Great Wisdom / tutorialrank.com | Page 274

financial statements indicates that it is probable that a liability
has been incurred.

13. A company discloses gain contingencies in the notes only
when a high probability exists for realizing them.

14. The expected profit from a sales type warranty that covers
several years should all be recognized in the period the warranty
is sold.

15. The fair value of an asset retirement obligation is recorded
as both an increase to the related asset and a liability.

16. The cause for litigation must have occurred on or before
the date of the financial statements to report a liability in the
financial statements.