Which contingent liabilities resulting from the Volkswagen (VW) emissions cheating scandal would be recognized or disclosed in Volkswagen Group’s financial statements? Original blog posting (January 19, 2016)

Photographer: http://www.123rf.com/profile_lacost Volkswagen Volkswagen Group (VW) was caught in an emissions cheating scandal in 2015 VW has admitted up to 11 million vehicles have the cheating software VW may face consequences from the EPA, IRS, and FBI It is also facing multiple class action lawsuits Photographer: http://www.123rf.com/profile_lacost

Question 1 What contingencies can you identify stemming from the VW emissions scandal?

Question 2 Sort the contingencies you listed into two categories: probable and possible. (For the purpose of this question, “probable” is defined as “more likely than not,” which means that the chance is more than 50% that this contingent event will occur.) Which set of contingencies would VW Group recognize or disclose in its financial statements?

Question Recap What contingencies can you identify stemming from the VW emissions scandal? Sort the contingencies you listed into two categories: probable and possible. (For the purpose of this question, “probable” is defined as “more likely than not,” which means that the chance is more than 50% that this contingent event will occur.) Which set of contingencies would VW Group recognize or disclose in its financial statements?

For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at http://accountingintheheadlines.com/ Questions or comments? Contact Dr. Wendy Tietz at wtietz@kent.edu