Current Liabilities and Contingencies

2090 Words Nov 17th, 2014 9 Pages
ACCT 2015 INTERMEDIATE FNANCIAL ACCOUNTING 11
Current Liabilities, Contingencies & Provisions
Required Reading: Alfredson – Chap 5, Keiso – Chaps 13, IAS 37

Learning Objectives
1. CURRENT LIABILITIES:
– Define and explain types of current liabilities. – Account for the major types

2. IAS 37 PROVISIONS & CONTINGENCIES
– Define Provisions and answer the following questions:
• • • Why do them When to provide How much to provide

– Calculate and account for Restructuring Provisions – Define Contingent Assets & Liabilities and apply relevant measurement and recognition rules – Apply IAS 37 Disclosure Requirements

CURRENT LIABILITIES
LIABILITY – Claims against the business arising out of a past transaction that will cause an
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CURRENT LIABILITIES
Oct. 1 - Borrowed $50,000 from the Shore Bank by signing a 12-month, zero-interest-bearing $54,000 note.
Oct. 1

Cash Discount on notes payable Notes payable

50,000 4,000 54,000

Dec. 31

Interest expense 1,000 Discount on notes payable
($4,000 x 3/12)

1,000

CURRENT LIABILITIES
Current Maturities of Long-Term Debt
Exclude long-term debts maturing currently as current liabilities if they are to be:
1.

Retired by non current assets e.g. land

2. Refinanced, or retired from the proceeds of a new debt issue, or 3. Converted into capital stock.

CURRENT LIABILITIES
Short-Term Obligations Expected to Be Refinanced
Not a current liability if both conditions are met: 1. Must intend to refinance the obligation on a longterm basis. 2. Must demonstrate an ability to refinance: Actual refinancing Enter into a financing agreement

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CURRENT LIABILITIES
Dividends Payable
Amount owed to stockholders as declared by the board of directors. Generally paid within three months. Undeclared dividends on cumulative preferred stock not recognized as a liability. Dividends payable in the form of shares of stock are not recognized as a liability. Reported in equity.

CURRENT LIABILITIES
Unearned Revenue- BE13-5 Game Pro Magazine sold 10,000 annual subscriptions on August 1, 2007, for $18 each. Prepare Game Pro’s August 1, 2007, journal entry and the December 31, 2007, annual adjusting entry.
Aug. 1 Cash Unearned…