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Kieso_Inter_13e_Ch13

Kieso_Inter_13e_Ch13 - CHAPTER 13 13 CURRENT LIABILITIES...

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Chapter 13-1 C H A P T E R C H A P T E R 13 13 CURRENT LIABILITIES AND CURRENT LIABILITIES AND CONTINGENCIES CONTINGENCIES Intermediate Accounting 13th Edition Kieso, Weygandt, and Warfield
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Chapter 13-2 What is a Liability? What is a Liability? FASB, defines liabilities as: Probable Future Sacrifices of Economic Benefits arising from present obligations of a particular entity to transfer assets or provideservices to other entities in thefutureas a result of past transactions or events.”
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Chapter 13-3 What is a Current Liability? What is a Current Liability? Current liabilities are“obligations whoseliquidation is reasonably expected to requireuseof existing resources properly classified as current assets, or the creation of other current liabilities.” Typical Current Liabilities: Accounts payable. Notes payable. Current maturities of long-term debt. Short-term obligations expected to be refinanced. Dividends payable. Customer advances and deposits. Unearned revenues. Sales taxes payable. Incometaxes payable. Employee-related liabilities. LO 1 Describethenature, type, and valuation of current liabilities.
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Chapter 13-4 Balances owed to others for goods, supplies, or services purchased on open account. Accounts Payable(tradeaccounts payable) What is a Current Liability? What is a Current Liability? LO 1 Describethenature, type, and valuation of current liabilities. Arise becauseof timelag between receipt of goods or services and the payment for them. Theterms of thesale (e.g., 2/10, n/30) stateperiod of extended credit.
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Chapter 13-5 Written promises to pay a certain sum of money on a specified future date. Notes Payable What is a Current Liability? What is a Current Liability? LO 1 Describethenature, type, and valuation of current liabilities. Arise from purchases, financing, or other transactions. Notes classified as short-term or long-term. Notes may be interest-bearing or zero-interest-bearing.
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Chapter 13-6 Illustration (Interest-Bearing Note): CastleNational Bank agrees to lend $100,000 on March 1, 2010, to LandscapeCo. if Landscapesigns a $100,000, 6 percent, four-month note. Landscaperecords the cash received on March 1 as follows: What is a Current Liability? What is a Current Liability? LO 1 Describethenature, type, and valuation of current liabilities. Cash 100,000 Notes Payable 100,000
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Chapter 13-7 Illustration (Interest-Bearing Note): If Landscape prepares financial statements semiannually, it makes the following adjusting entry to recognizeinterest expense and interest payable at June30: What is a Current Liability? What is a Current Liability? LO 1 Describethenature, type, and valuation of current liabilities. Interest expense 2,000 Interest payable 2,000 ($100,000 x 6% x 4/12) = $2,000 Interest calculation =
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Chapter 13-8 Illustration (Interest-Bearing Note): At maturity (July 1), Landscape records payment of the noteand accrued interest as follows.
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