chapter 13 ac 311 2

chapter 13 ac 311 2 - CHAPTER 13: Whats in current...

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CHAPTER 13: Whats in current liabilities? Exclude from current liabilities: 1.intent to refinance on long term basis 2.demonstate an ability to reconsummate -actually refinancing the debt by issuing long term obligation -entering into a financing agreement Included in current liabilities: -dividends payable **Not stock dividends or dividends in arrears (undeclared accumulated dividends) -returnable cash deposits -taxes payable -payable deductions -compensated absenses -bonuses Compensated absenses: Accrue liabiltity if: -obligation is for services already rendered -obligation relates to the rights that vest (obligation to pay even after terminated-not contingent on employees future service) or accumulate (can carry forward if not used) -payment of the compensation is probable -amount can be reasonably estimated Sick pay - If benefits vest company must accrue - If benefits accumulate but do not vest, company must choose whether not to accur Recognize the expense and related liability for compensated absenses in the year earned by employees GAAP silent on rate to accrue- current rate or future rate - Comanpany will likely use current rate because its more certain - If using current ten the liability is accrued when employees EARN the compensation and cash accrued when employees USE the compensation
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chapter 13 ac 311 2 - CHAPTER 13: Whats in current...

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