ACC 422 Week 4 DQs

The pack of ACC 422 Week 4 Discussion Questions consists of next points:

DQ 1: What are the criteria for classifying an item as a current liability? What are some examples of current liabilities? Why is it important to classify a portion of long-term debt on a yearly basis as a current liability? What is the implication of misclassification a liability as current or long-term?

DQ 2: What is a contingency? Why are contingencies important to users of financial statements? What are the criteria for recording contingencies? Should companies record a liability for threatened litigation? Explain why or why not.

DQ 3: There is considerable doubt surrounding the accrual and disclosure of loss contingencies. Initially it may appear that the right answer is just to accumulate the maximum loss. Makes sense in case accountants are working under the rule of conservatism, correct?

DQ 4: GAAP need loss contingencies to be accrued in the period the contingency becomes known. However, GAAP specifically disallows booking gain contingencies until the gain is realized. Do you agree or disagree? Why?

DQ 5: What is a bond? What are some features of a bond? How do you value bonds? What factors can affect that value?