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Generally Accepted Accounting Principles
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| U.S. GAAP Codification | Accounting Topics |
| Principles of Accounting, U.S. GAAP Financial Reporting Guide |
| Accounting by Topic, Accounting Terms Dictionary |
| SFAS No. 5 |
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Statement of Financial Accounting Standards (SFAS) No. 5 a. Accounting for Contingencies b. Issued in March 1975 c. Deletes ARB No. 43, Chapter 6, "Contingency Reserves", June 1953 d. Supersedes ARB No. 50, "Contingencies", October 1958 Accrual of Loss Contingencies a. Estimated loss from a loss contingency --> accrued by a charge to income --> if both of the following conditions are met Conditions of Loss Contingencies Accrual a. A loss contingency is probable. b. Amount of loss can be reasonably estimated. Likelihood of Loss Contingencies a. Probable --> likely to occur b. Reasonably possible --> more than remote but less than likely c. Remote --> chance of occurring is slight. Examples of Loss Contingencies a. Collectibility of receivables b. Product warranties c. Risk of loss or damage of property d. Pending litigation Gain Contingencies a. Gain contingencies --> are not reflected in the accounts --> adequate disclosure shall be made --> avoid misleading implications as to the likelihood of realization. |
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