SUBJECT: FINANCIAL ACCOUNTING & REPORTING 3

QUESTIONG ASKING FOR WORKING SO I NEED WORKING FOR ALL

c) Produce three (3) possible contingent liabilities that the company might face. The possible situations will be made depending on the nature of the company and you need to provide workings and advice proper recording based on your workings. Contingent Liability is the company's potential liability, which depends on the happening or non-happening of some contingent event in the future that is beyond the company's control. Examples of contingent liabilities include potential pending lawsuits from the company, warranties and so on. The most common contingent liabilities that found in Petronas are: i. Product Warranty Some companies provide a warranty on their product. For example, information is provided by PETRONAS and while we endeavour to keep the information up to date and correct, PETRONAS make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk. In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website. ii. Lawsuit A lawsuit is a claim or dispute brought to a court for adjudication. The management of PETRONAS would like to clarify and inform the public about the various scams that are being used on the internet. The scam notices include job recruitment fraud, fake merchandise, online investment scams, damage compensation scams, third party sponsorship requests, PETRONAS secured online promotion emails, and so on. iii. Government Policy Directors' Fit and Policy. Directors' Fit and Proper Policy is set to require all Board members of PGB and its subsidiaries to have the necessary qualities, competencies and experience that allows them to perform their duties and carry out the responsibilities required of them. a change in government policies due to their product costs getting higher. It would imply that tax rates change, or the company has to spend some percentage of its profit on welfare funds. Thus, the company will have to disclose and note contingent liabilities in their notes of accounts. iv. Change in Foreign Exchange Suppose a company does import-export business by procuring raw materials from one country and supplying finished goods. However, the company must make foreign currency payments, and exchange rates might fluctuate because of global economic conditions. Due to this, the company will have to make more payments to its creditors than its actual cost. As a result, the company will record a contingent liability in its books of accounts. However, the company will receive more money from its debtors than its selling price. Therefore, technically, they will not record this contingent asset in their books of accounts because of accounting principles. PETRONAS used USD currency to conduct the international business