T11 and 14

T11 and 14 - 1 Chapter 11: Current liabilities and Payroll...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 Chapter 11: Current liabilities and Payroll accounting Chapter 14: Long term liabilities NOTE ON READING: Exclude TB pg. 439 – 443 (payroll liability – part of the content, not applicable in Hong Kong, Multi period estimated liability -- to be covered in IA2 Pension accounting) Exclude TB pg 550 -560 (Bonds – to be covered in Corporate Finance and IA2 Bonds accounting) 1. Current liabilities accounting - Creation of a payable account - Notes payable (a reverse for note receivable) 2. Estimated liability Warranty expense Dr. Warranty Cr. Estimated warranty expense Dr. Estimated warranty expense Cr. Cash / Inventory (when realized) *3. Accounting for contingent liability (HKAS37) Likelihood of outcome Accounting record Virtually certain Recognition as liability Probable Recognition as liability Possible Disclosure in the FS Remote NIL or disclosure if very prudent 4 Long term liability Long term notes payable (Installment notes – fixed payment per period) Read Exhibit 14.14 for details QUESTION: How to compute the equal fixed payment Formula: For the fixed payment C Initial Sum = C* PV value factor (which is given) Additional Problem Ex11-2 Exercise 11-2 (15 minutes) [ Note: All entries dated December 31, 2009.] 1. Warranty Expense ........................................................................ 3,444 Estimated Warranty Liability .............................................. 3,444 To record warranty expense [4,100 units x 6% x $14]. 2. No adjusting entry can be made since the loss cannot be reasonably estimated. Disclosure of the suit as a contingent liability should be made in the notes to the financial statements. 2 3. Vacation Benefits Expense ............................................................Vacation Benefits Expense ....
View Full Document

This note was uploaded on 11/22/2011 for the course BUSI 1002 taught by Professor Liu during the Fall '10 term at HKU.

Page1 / 4

T11 and 14 - 1 Chapter 11: Current liabilities and Payroll...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online