54 - • Likelihood of future event is assessed as Probable...

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Current Portion of Long-Term Debt Some long-term debt is paid in installments Any amount due in the upcoming year is reclassified as a current liability Current Liabilities That Are Estimated (Amounts Unknown) Estimated Warranty Payable Contingent Liabilities Estimated Warranty Payable Companies guarantee products through warranty agreements Warranty expense is estimated in same period as sale of product Matching principle Contingent Liabilities Potential liability that depends on a future event arising out of past events
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Unformatted text preview: • Likelihood of future event is assessed as: Probable Reasonably possible Unlikely Accounting for Contingent Liabilities Likelihood Accounting Probable Record liability if amount can be estimated Reasonably Possible Include in notes to financial statements Unlikely Do not report Long-Term Liabilities: Bonds • To raise capital, companies sell bonds to the public • Bonds payable are groups of notes payable issued to multiple lenders, called bondholders...
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