Current Liabilities and Contingencies

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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…show more content…
31 2 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 3 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

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