Business > CASE STUDY > Discuss the two main distinctions between assets on the balance sheet. ï‚·Discuss the two (All)

Discuss the two main distinctions between assets on the balance sheet. ï‚·Discuss the two

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Discuss the two main distinctions between assets on the balance sheet. ï‚·Discuss the two main distinctions between assets on the balance sheet. The two main distinctions between assets on a balance sheet are current and long-term assets. Current assets on a balance sheet contain all the assets that can be likely to convert into cash within a year or quicker; such as cash, inventory or accounts receivable. Long-term assets are known as noncurrent assets that have a useful life of more than a year and usually last for several years. Long term assets are considered noncurrent and are illiquid, meaning they can be easily liquidated into cash. ï‚·Discuss reporting requirements for contingencies. Contingent liabilities must pass two thresholds before it can be reported on a financial statement. It must first be possible to estimate the value of the contingent liability, if the value is estimated then the liability must be more than 50% of being realized. Qualified contingent liabilities are recorded as an expense on the income statement and liability on the balance sheet. However, it the contingent loss is remote; which is less than 50% then the liability should not be reflected on the balance sheet. Any contingent liability that may be questionable before the value can be determined should be disclosed in the footnotes of the financial statement. ï‚·Explain two examples of contingent liabilities Two examples of contingent liabilities are a company warranty and lawsuit against a company, these both represent a possible loss to the co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. .. . . . . . . . . . . . . . . . . . .. . . . .

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