L14 Notes 12 - Received in advance 1 = most certain; 6 =...

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© W.R. Knechel Classification of Liability by Degree of Uncertainty 1 2 3 4 5 6 Obligations with Obligations with Obligations for Obligations Arising from Obligations Fixed Payment Fixed Payment Which the firm Advances from Cust. under Mutually Dates and Amounts but Estimated Must Estimate both on Unexecuted Contracts Unexecuted Contingent Amounts Payment Dates Timing & Amt of Pymt and Agreements Contracts Liabilities Notes Payable Accounts Payable Warranties Payable * Rental Fees Received Purchase Unsettled Lawsuits *** Interest Payable Taxes Payable in Advance Commitments ** Bonds Payable Subscription fees Employment Contracts Financial instruments with off-balance sheet risk
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Unformatted text preview: Received in advance 1 = most certain; 6 = least certain 1-4 are accounting liabilities, 5 and 6 are not generally recognized as liabilities * - If the firm cannot estimate the future warranty cost with reasonable precision, it will not recognize revenue at the time of sale so there is liability ** - If the market price of a purchase commitment for inventory is less than the contract price, the firm recognizes a loss and a liability in the amount of the loss. *** - If an obligation is probable and reasonably estimatible, then a liability is booked. STICKNEY & WEIL FINANCIAL ACCOUNTING TEXT 12 ed....
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This note was uploaded on 10/05/2011 for the course ACG 5637 taught by Professor Monikacaushoulli during the Fall '08 term at University of Florida.

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