Flashcards in Section 13 - Liabilities Deck (17):
What is Current Liabilities valued at?
NRV or settlement value
What are the two methods to record a liability?
1) Gross method - purchase are shown at gross, if discount is taken, it is considered a reduction to Cost of Sales
2) Net method - purchases are show at net, if discount is not taken, considered interest expense
What is an Accrued Liabilities/Expense?
An expense that is incurred but not yet paid in cash.
A current liability.
Example: unpaid salaries or taxes at year end
Accrued Liability (B/S, ie Salaries Payable)
What is a Prepaid Expenses?
Expenses paid in cash, but not yet incurred.
Example: Prepaid rent
Prepaid Expense (asset)
What is a Deferred Revenues?
Revenue collected but not yet earned.
Example: rent collected or subscriptions collected in advance, gift certificates issued but not yet redeemed
Unearned Revenue (B/S)
Unearned Revenue (B/S)
What is Revenue Receivable?
Revenue earned but not yet collected.
Example: revenue earned but still due from customer
What are the steps to determine the estimated liability for unredeemed coupons?
1) Determine Face Value
2) Add handling fee % promised to merchant
3) Multiply by the % of coupons expected to be redeemed
4) Subtract payments already made to merchants for redeemed coupons.
What accounting principles does "Compensated Absences" take into consideration?
Faithfully Represented (Neutrality)
How are Loss Contingencies disclose and accrue?
-Remote - SLIGHT chance of occuring
-Reasonably Possible - More than Remote, less than Probably
-Probably - LIKELY to occur
-If not estimable
-Do accrue (conservatism and matching)
How are Gain Contingencies disclose and accrue?
Cannot accrue due to conservatism (only accrue if you have $$ in hand)
Remote - no disclose and no accrue
Reasonably possible - yes disclose, no accrue
Probable & estimable - yes disclose, no accrue
How are Subsequent Events for Loss/Gain Contingencies disclose and accrue?
Type I - Condition existed at B/S date
-Accrue and disclose
Type II - Condition did not exist at B/S date
-Disclose but not accrue
What are Notes Payable recorded at?
What are long-term payable recorded at?
What must be present for short-term liability expected to be refinanced to be reported as noncurrent liability (long term)?
Intent and ability
Under IFRS, what must exist before an entity's short-term obligations can be classified as long-term?
An AGREEMENT to refinanced into long-term
Under IFRS, what is contingency and provision?
Contingency is a potential liability that DOES NOT need to be recognize on the B/S
Provision is a potential liability that DOES need to be recognize on the B/S