Session 5 ch13 and 14.pptx - ACY591I Session 5(Chapter 13 14 Current Liabilities Provisions and Contingencies Non-Current Liabilities CHAPTER 13 Current

Session 5 ch13 and 14.pptx - ACY591I Session 5(Chapter 13...

This preview shows page 1 - 12 out of 184 pages.

ACY591I Session 5 (Chapter 13 & 14) Current Liabilities, Provisions, and Contingencies Non-Current Liabilities
Image of page 1

Subscribe to view the full document.

1. Describe the nature, valuation, and reporting of current liabilities. 2. Explain the accounting for different types of provisions. 3. Explain the accounting for loss and gain contingencies. 4. Indicate how to present and analyze liability-related information. After studying this chapter, you should be able to: Current Liabilities, Provisions, and Contingencies CHAPTER 13 LEARNING OBJECTIVES
Image of page 2
PREVIEW OF CHAPTER 13
Image of page 3

Subscribe to view the full document.

Three essential characteristics : 1. Present obligation. 2. Arises from past events. 3. Results in an outflow of resources (cash, goods, services). Current Liabilities LEARNING OBJECTIVE 1 Describe the nature, valuation, and reporting of current liabilities.
Image of page 4
A current liability is reported if one of two conditions exists: 1. Liability is expected to be settled within its normal operating cycle; or 2. Liability is expected to be settled within 12 months after the reporting date. The operating cycle is the period of time elapsing between the acquisition of goods and services and the final cash realization resulting from sales and subsequent collections. Current Liabilities
Image of page 5

Subscribe to view the full document.

Typical Current Liabilities: 1. Accounts payable. 2. Notes payable. 3. Current maturities of long- term debt. 4. Short-term obligations expected to be refinanced. 5. Dividends payable. 6. Customer advances and deposits. 7. Unearned revenues. 8. Sales and value-added taxes payable. 9. Income taxes payable. 10. Employee-related liabilities. Current Liabilities
Image of page 6
Accounts Payable ( trade accounts payable ) Balances owed to others for goods, supplies, or services purchased on open account. Time lag between the receipt of services or acquisition of title to assets and the payment for them. Terms of the sale (e.g., 2/10, n/30 or 1/10, E.O.M.) usually state period of extended credit, commonly 30 to 60 days. Current Liabilities
Image of page 7

Subscribe to view the full document.

Notes Payable Written promises to pay a certain sum of money on a specified future date. Arise from purchases, financing, or other transactions. Notes classified as short-term or long-term. Notes may be interest-bearing or zero-interest-bearing. Current Liabilities
Image of page 8
Illustration: Castle Bank agrees to lend €100,000 on March 1, 2019, to Landscape Co. if Landscape signs a €100,000, 6 percent, four-month note. Landscape records the cash received on March 1 as follows: Cash 100,000 Notes Payable 100,000 Interest-Bearing Note Issued Current Liabilities
Image of page 9

Subscribe to view the full document.

If Landscape prepares financial statements semiannually, it makes the following adjusting entry to recognize interest expense and interest payable at June 30, 2019: Interest Expense 2,000 Interest Payable 2,000 (€100,000 x 6% x 4/12) = €2,000 Interest calculation = Interest-Bearing Note Issued
Image of page 10
At maturity (July 1, 2020), Landscape records payment of the note and accrued interest as follows.
Image of page 11

Subscribe to view the full document.

Image of page 12
  • Summer '13
  • Peter

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes