CH 13 - Chapter 13 Current Liabilities and Contingencies...

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Unformatted text preview: Chapter 13 Current Liabilities and Contingencies Intermediate Accounting 13th Edition Kieso, Weygandt, and Warfield Copyright Protected Chapter 13-2 1. Describe the nature , type , and valuation of current liabilities. 2. Explain the classification issues of short-term debt expected to be refinanced . 3. Identify types of employee-related liabilities. 4. Identify the criteria used to account for and disclose gain and loss contingencies . 5. Explain the accounting for different types of loss contingencies. 6. Indicate how to present and analyze liabilities and contingencies. Learning Objectives Chapter 13-3 Current Liabilities Contingencies Presentation and Analysis What is a liability? What is a current liability? Gain contingencies Loss contingencies Presentation of current liabilities Presentation of contingencies Analysis of current liabilities Current Liabilities and Contingencies Chapter 13-4 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 provide services to other entities in the future as a result of past transactions or events. Chapter 13-5 FASB Definition of a Liability A liability has three essential characteristics: (a) it is a present obligation that entails settlement by probable future transfer or use of cash, goods, or services; (b) it is an unavoidable obligation; and (c) the transaction or other event creating the obligation has already occurred. Liabilities are classified on the balance sheet as current obligations or long-term obligations . Current liabilities are those obligations whose liquidation is reasonably expected to require use of existing resources classified as current assets or the creation of other current liabilities. Chapter 13-6 What is a Current Liability? Current liabilities are obligations whose liquidation is reasonably expected to require use of 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. Income taxes payable. Employee-related liabilities. LO 1 Describe the nature, type, and valuation of current liabilities. Chapter 13-7 Illustration (Interest-Bearing Note): Castle National Bank agrees to lend $100,000 on March 1, 2010, to Landscape Co. if Landscape signs a $100,000, 6 percent, four-month note. Landscape records the cash received on March 1 as follows: What is a Current Liability? LO 1 Describe the nature, type, and valuation of current liabilities....
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CH 13 - Chapter 13 Current Liabilities and Contingencies...

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