lec14 - Current Liabilities and Contingencies 15.511...

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1 Current Liabilities and Contingencies 15.511 Corporate Accounting Summer 2004 Professor S.P. Kothari Sloan School of Management Massachusetts Institute of Technology July 1, 2003
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2 Agenda ± Nature and reporting of current liabilities ± Understand the nature and reporting requirements of contingencies ± Illustrate the trade-off between reliability and relevance in accounting for contingencies
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3 Liabilities and Off Balance Sheet Financing ± What is the definition of liabilities in GAAP? ± Probable future sacrifices of resources ± Little or no discretion to avoid the sacrifice ± Transaction or event giving rise to the obligation has occurred ± Classification on a continuum ± On Balance sheet ± Off Balance sheet ± Motivation for off balance sheet financing?
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4 Examples of Liabilities and Off Balance Sheet Financing ± Bonds, notes payable ± Accrued wages, supplier finance ± Warranty obligation ± AAA receives $ from the sale of memberships for the next two years ± Columbia pictures signs a binding contract with Cineplex Odeon to supply films within the next six months. ± Online Corp. signs a contract promising to employ its president
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lec14 - Current Liabilities and Contingencies 15.511...

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