The criteria for distinguishing between whether an expenditure is a capital item or a deductible expense is the useful life of the item.
If the purchase is going to be used and no longer have value at the end of the reporting period it is an expense for that period. If the item is a capital item it is going to have a longer useful life. In this case the item is depreciated over its useful life, assigning an expense amount to each accounting period that the item has value.
Answer: Higgins should report this litigation as a contingent liability.
Explanation: A liability that is contingent upon an event, that is, dependent on a future event that may or may not happen is called contingent liability. Potential law suits, pending investigations are some of the examples of contingent liability.
A contingent liability will only be recorded if there is likely probability that the event on which such liability depends will occur and the amount of liability could be reasonably estimated.
Answer:
The final amount in Cash is $9,034
Explanation:
1.
As cash is received, the cash balance is increased by $10, and account receivables are decreased by $10.
2.
As cash is paid for the purchase the cash balance is decreased by $16 and inventory value will increase by $16.
3.
As the sale is made for cash, the cash balance is increased by $40, and the inventory balance is decreased by the same value.
Cash balance = $9,000 + $10 - $16 + $40 = $9,034
The working is attached with this answer please find it.
Answer:
Failure to buy adequate business insurance
Explanation:
