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Chapter%2009_slide - 14-1 Key Terms Chapter 9 Reporting and...

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14-1 Chapter 9 Reporting and Interpreting Liabilities Acct 2301 Fall 08 Li Current Liability Long-term (noncurrent) liability Estimated Liability Ratios on Liquidity Time value of money Present value Future value Compounded interest rate Key Terms Probable debts or obligations result from past transaction and will be paid by assets or service Measured and reported at its current cash equivalent Interest is accounted separately Liabilities Current Liabilities Accounts Payable Short-term notes payable (1 year or shorter maturity period) Current portion of Long-term debt Salary Payable Income taxes payable Payroll taxes payable (employee income tax withheld, FICA taxed employee share) Deferred Revenue Long-term Liabilities Private debt: Bank loans Notes payable (> 1 year) Public debt: Bonds payable. Lease (more in intermediate accounting) Estimated Liabilities - 1 Estimated liabilities are reported on B/S Probable, and Measurable Example: Warranty payable Warranty liability and warranty expense are recorded at the time of sale; not at the time when cash was paid for repairs under warranty (why?)
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14-2 Estimated Liabilities - Warranty Example, in December 2005, Best Buy sold XBOX 360 for $100,000. Along with the sale, a two-year warranty is included.
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