Accounting for Contingencies (Portfolio 5165)

Allen Schiff

Professor, Accounting and Taxation

Fordham University, School of Business

Cheri-Mazza

Cheri Mazza Mazza

CEO and Owner

CRM Accounting and Financial Consulting

Dr. Dawn MasseyAccountingDSB

Dawn Massey

Professor of Accounting

Fairfield University

Joan Van HiseProfessor of Accounting

Joan Lee

Professor of Accounting

Fairfield Univeristy

schiff-jonathan-2015

Jonathan Schiff

Professor of Accounting

Fairleigh Dickinson University

At a glance

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

Abstract

Tax Management 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 Tax Management Portfolio 5165, Massey, Mazza, Schiff, Schiff and Van Hise, Accounting For Contingencies (Accounting Policy and Practice Series)

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