One topic covered in chapter 12 mc and then again in chapter 10 is contingencies. For your convenience, I attach a PowerPoint file from Spiceland et als (2020) Intermediate Accountingchapter 13 Contingencies (see footnote link below). This is a topic covered in ACCT 3021. Focus on the highlighted slides 44-66.

1. What is a contingent liability? (answer in your own words; if you copy and paste, indicate source and page/slide number)

2. Why should the auditor contact the legal counsel (lawyer) about contingent liabilities?

3. In the context of contingent liabilities, what does probablemean? Also give an example.

4. In this context, what does reasonably estimable mean? Also give an example.

5. Using the lessons learned from the Intermediate Accounting PowerPoint, explain why the auditor should not qualify the report. If you provide the words in the answer key solution you will get no credit.