week 4 - School of Accounting ACCT 1511 Accounting and...

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School of Accounting ACCT 1511 Accounting and Financial Management 1B Session 2, 2010 Week 4 Liabilities Student Handout Contents: 1. Learning Objectives (LO) 2. Tutorial Questions 3. Lecture Materials Lecturer: Dr Leon Wong
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Introduction and Learning Objectives At the end of this week, you should: LO1. Understand the definition and recognition of liabilities as set out in the Framework. LO2. Internalise the various types of liabilities, current, non-current, provisions and contingent, and off-balance sheet items, and the basic accounting principles and assumptions that apply. LO3. Consider the position of liabilities within the context of the balance sheet and the A = L + E equation. LO4. Summary: Be able to apply accounting principles to Asset and Liability items and be appreciate the limitations of Balance Sheet information. Required Readings Trotman & Gibbins (TG) – Chapter 10.1 - 10.6, 10.8-10.10 Additional References Tutorial Questions for Week 3 (Commencing 2 August) Preparation Questions Trotman and Gibbins: Problem 10.4 Problem 10.10 Problem 10.31 Homework Questions Trotman and Gibbins: Problem 10.13 Problem 10.30 Case 10B Clarification of (3), relevant paragraph refers to “But as unsecured creditors they stand to lose every cent unless the receiver recoups more than $570 m, having paid off the banks first”.
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L1 ACCT1511 Liabilities Week 4 1 Dr Leon Wong QUAD 3063 [email protected] Classifications In The Balance Sheet ± 3 general classes (assets, liabilities and equity) are further subdivided. Assets ± Current assets Liabilities and equity ± Current liabilities 2 ± Non-current assets ± Intangible assets ± Other assets ± Non-current liabilities ± Share capital ± Retained earnings ± Other reserves Liabilities: Definition ± “A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic 3 benefits” (AASB Framework, paragraph 49) ± Essential characteristics: – The existence of a present obligation – The obligation involves settlement in the future resulting in an outflow of economic benefits Liabilities: Recognition ± Recognition – only when the item meets two recognition criteria (AASB Framework, paragraph 83): 4 1. It is probable that any future economic benefit associated with the item will flow from the entity; and, 2. The item has a cost or value that can be measured with reliability . Does the item have all two essential characteristics of a liability? Does the liability meet No Yes Decision path for liability recognition 5 Does the liability meet both the recognition criteria? Does not appear
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This note was uploaded on 09/16/2011 for the course ACCT 1501 taught by Professor Helen during the Three '09 term at University of New South Wales.

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week 4 - School of Accounting ACCT 1511 Accounting and...

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