Acc011_08_CurrentLiabilities

Acc011_08_CurrentLiabilities - Current Liabilities...

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Current Liabilities Current Liabilities
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Valuation at present Valuation at present value value Liabilities are normally valued at their present value. Exception: short term payables to suppliers that arise in the normal course of business can be recorded at face value.
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Notes Payable Notes Payable Interest Bearing Non-interest bearing (face value of note includes interest)
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Example Example Companies A and B buy the same computer from CompUSA on June 30, 2009. Company A gives a one-year note with a face value of $12,000, and an interest rate of 12%. Company B gives a one-year non- interest bearing note with a face value of $13,440. Record the transaction and subsequent journal entries on the
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Long term debt that Long term debt that should be recorded as should be recorded as Current Current Obligations that are or will be callable. Debt is not normally callable by the creditor. However most debt contracts include provisions making the debt callable if the borrower violates a provision of the debt contract. Example: If the borrower falls below a 2:1 current ratio the lender has the right to demand payment immediately. At year end the borrower has a current ratio of
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Current maturities of Long-Term debt - portion of long-term debt due within next year. Exceptions Current maturities of Long-Term debt need not be classified as current if any of the following hold: – the long-term debt will be paid off by assets accumulated for that purpose, and the assets are not shown as current assets (sinking fund) – the long-term debt is to be refinanced with a new issue of debt or – the long-term debt is to be converted
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Short-term Obligations Short-term Obligations Expected to be Expected to be Refinanced Refinanced With either long-term debt or equity securities may be classified as long term. The
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This note was uploaded on 05/19/2008 for the course ACCT 3511 taught by Professor Balsam during the Spring '07 term at Temple.

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Acc011_08_CurrentLiabilities - Current Liabilities...

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