Accounting

Accounting for Contingencies (Portfolio 5165)

  • This Portfolio examines accounting for contingencies under both U.S. Generally Accepted Accounting Principles (U.S. GAAP) and International Financial Reporting Standards (IFRS).

Description

Bloomberg Tax Portfolio 5165, Accounting for Contingencies, examines accounting for contingencies under both U.S. Generally Accepted Accounting Principles (U.S. GAAP) and International Financial Reporting Standards (IFRS). The Portfolio also distinguishes contingencies from other similar items not properly accounted for as contingencies. The Portfolio’s subject matter commands widespread interest given the litigious nature of the business world and the need for entities to disclose significant risks to their future operations, cash flows, and net worth.

Accounting for contingencies includes reporting of potential losses from litigation in process, environmental damage, and expenses related to uncollectible accounts receivable and product warranty costs. The primary source accounting rules for contingencies under U.S. GAAP is FASB Statement No. 5, Accounting for contingencies (FAS 5), which is principally codified in FASB Accounting Standards Codification Topic 450 (ASC) . Its principal international counterpart is IASC International Accounting Standard 37, Provisions, Contingent Liabilities and Contingent Assets (IAS 37). Guarantees made by guarantors are special types of contingencies subject to their own set of rules in addition to those provided in the codified rules from FAS 5. Readers of this Portfolio will gain an understanding of reporting requirements for contingencies, as well as how this reporting is executed in the contemporary business setting.

This Portfolio may be cited as Bloomberg Tax Portfolio 5165, Massey, Mazza, Schiff, Schiff and Van Hise, Accounting For Contingencies (Accounting Policy and Practice Series)

Table of Contents

I. Scope and Purpose of Portfolio
II. Background of Accounting Pronouncements
III. Gain Contingencies
IV. Loss Contingencies
V. Contingencies in Business Combinations
VI. Guarantees Including Product Warranties
VII. Contingencies
VIII. Provisions, Contingent Liabilities, and Contingent Assets under International Accounting Standard (IAS) 37
IX. Examples of Assessing, Recognizing, and Disclosing Contingencies Under IAS 37
X. Possible Expanded Disclosure Requirements for Loss Contingencies
XI. Auditing Considerations

Dr. Dawn MasseyAccountingDSB
Dawn Massey
Interim Associate Dean & Director of Graduate Programs and Professor of Accounting
Fairfield University
Allen Schiff
Professor, Area Chair of Accounting & Taxation, Faculty Director of MS in Accounting and MTA Programs, & Lead Faculty Represent
Fordham University, School of Business
schiff-jonathan-2015
Jonathan Schiff
President
Fordham University, Fairleigh Dickinson University
Joan Van Hise
Joan Van Hise
Chair of the Accounting Department
Charles F. Dolan School of Business, Fairfield University