Pursuant to the conceptual framework, for an item to be characterised as a liability the definition of liabilities must be applicable to the transaction or event, and the recognition criteria should also be satisfied. Applying the definition of liabilities, there are three key components in the definition of ‘liability’, these being: 1. There must be an expected future disposition of economic benefits to other entities. 2. There must be a present obligation. 3. A past transaction or other event must have created the obligation. Required: Take any two examples of liabilities and test if they meet all three requirements.
Pursuant to the conceptual framework, for an item to be characterised as a liability the definition of liabilities must be applicable to the transaction or event, and the recognition criteria should also be satisfied. Applying the definition of liabilities, there are three key components in the definition of ‘liability’, these being: 1. There must be an expected future disposition of economic benefits to other entities. 2. There must be a present obligation. 3. A past transaction or other event must have created the obligation. Required: Take any two examples of liabilities and test if they meet all three requirements.
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter4: Balance Sheet: Presenting And Analyzing Resources And Financing
Section: Chapter Questions
Problem 3Q
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Pursuant to the conceptual framework, for an item to be characterised as a liability the definition of liabilities must be applicable to the transaction or event, and the recognition criteria should also be satisfied. Applying the definition of liabilities, there are three key components in the definition of ‘liability’, these being:
1. There must be an expected future disposition of economic benefits to other entities.
2. There must be a present obligation.
3. A past transaction or other event must have created the obligation.
Required:
Take any two examples of liabilities and test if they meet all three requirements.
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