Please respond to one of the following topics. TOPIC 1: Try this for planning yo

Question

Please respond to one of the following topics.

TOPIC 1: Try this for planning your own retirement account:  Given a stated level of biweekly or monthly contributions, any employer matching added in, an assumed average annual earnings, and the expected number of years until you retire, calculate the expected size of your retirement account. And please remember that this exercise is for only one part of your financial future.

TOPIC 2: Many firms believe that it is very difficult to estimate the amount of a possible future contingency. Should a contingent liability be reported even when the dollar amount of the loss is not known? Should it be disclosed in the notes to financial statements? Explain.

Explanation / Answer

An estimated loss from a loss contingency (as defined in paragraph 1) shall be accrued by a charge to

Income if both of the following conditions are met:

It is implicit in this condition that it must be probable that one or more future events will occur confirming the fact of the loss

Disclosure of Loss Contingencies in Notes:

Disclosure of the nature of an accrual made pursuant to the provisions of above paragraph, and in some

Circumstances the amount accrued may be necessary for the financial statements not to be misleading.

If no accrual is made for a loss contingency because one or both of the conditions in above paragraph are not Met, or if an exposure to loss exists in excess of the amount accrued pursuant to the provisions of disclosure of the contingency shall be made when there is at least a reasonable possibility that a loss or an

Additional loss may have been incurred.

The disclosure shall indicate the nature of the contingency and shall give an estimate of the possible loss or range of loss or state that such an estimate cannot be made.

Disclosure is not required of a loss contingency involving an unasserted claim or assessment when there has been no manifestation by a potential claimant of an awareness of a possible claim or assessment unless it is considered probable that a claim will be asserted and there is a reasonable possibility that the outcome will be unfavorable.

So if there was a possible assertion of amount of loss it should be disclosed.

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