Liabilities Flashcards
Interest expense on self-constructed long-term assets
may be capitalized to the extent that interest is actually paid
IFRS vs GAAP: how to reclassify a refinance?
GAAP requires only intent and ability to arrange for long-term refinancing.
IFRS requires an actual refinancing agreement in place at the balance sheet date in order to report a current liability as non-current. Whatever loan doesn’t have agreement, will be still considered current.
refinance ST loan to LT loan
Under GAAP, if a company demonstrates both the intent and ability to refinance short-term obligations on a long-term basis AFTER the balance sheet date but BEFORE the issuance of financial statements, then the obligations may be categorized as long-term on the financial statements.
When a most likely amount exists within a range
ex: liab between 100k and 200k, but most likely 130k.
the reporting company must accrue the most likely amount and disclose that range
must use 130k.
if no “most likely” exist, use the smaller # in the range.
Contingencies are those that are not probable, not estimable, or neither probable nor estimable
ARE disclosed in the notes to the financial statements but are not recognized on the balance sheet.
Provisions are those that are
both probable and estimable and are recognized on the balance sheet.
deferred tax assets and liabilities
are non current
if loss/disaster happens after balance sheet date (dec31) but the fin. statement hasnt been issued:
disclose the loss, but don’t accrue since it happened after balance sheet date
when is dividends accrued
only when declared
gain contingencies
that’s probable or reasonably possible may be disclosed, but NEVER accrue
A gain contingency is not accrued until it is REALIZED.
employer’s payroll tax liab/exp
FICA
FUTA
employEE’s tax withheld
FICA
federal income tax withheld
amounts are withheld from employee’s wages by the employer and then is remitted to the tax authority.
gross method
under the gross method, inventory is recorded at the invoice price and only discounts taken are recognized.
net method
Under the net method, it is assumed that all discounts will be taken and any forfeited discounts are recognized as expense
IFRS: what’s a contingency?
potential obligations that are not recognized as liabilities either because the outflow of resources is not probable or the amount is not reasonably estimable
