F5: Liabilities

Question 1

Upon initial recognition of an asset retirement obligation, what action should NOT be taken?

Answer 1

Capitalize the asset retirement cost at its UNdiscounted cash flow value. Should be reported at PV or discounted rate.

Question 2

When is gain recognized by the debtor in a debt restructuring?

Answer 2

If the face amount of the payable exceeds the FMV of assets and/or equity transferred.

Question 3

Calculate estimated liability for coupons.

Answer 3

Take the total number of packages times expected redemption rate. Less redemptions made. Divide by total number of coupons to make package. Multiply by net cost.