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7252569-MIdterm-1 (dragged) 12 - a Income taxes payable b...

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Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Eighth Canadian Edition 13-13 8. Collections for Third Parties: a. Sales taxes b. Income tax and other payroll deductions, such as Canada Pension Plan premium, employment insurance, and union dues. 9. Accrued Expenses or Liabilities: a. Accrued payroll taxes: These would include the employer's share of CPP and employment insurance premiums. b. Accrued property taxes: The accounting questions involved here are when the property owner should record the liability , and to which periods the cost should be charged. 10. Compensated Absences: These are absences such as vacations, illnesses, or holidays for which employees are normally paid . When benefits vest, accrual of the estimated liability is recommended. 11. Conditional Payments: These are liabilities that depend on annual income and therefore cannot be known for certain until the end of the period.
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Unformatted text preview: a. Income taxes payable b. Bonus agreements D. Estimated Liabilities 1. Guarantee and Warranty Costs: The amount of the liability is an estimate of all the costs that will be incurred after sale and delivery. a. Cash basis method b. Accrual methods: (1) Expense warranty treatment . This method should be used whenever the warranty is an integral and inseparable part of the product sale and requires warranty costs to be charged to operating expense in the year of sale. (2) Sales warranty treatment . This method should be used when the warranty is sold separately from the product and requires that revenues from the sale of the warranty be deferred and subsequently recognised as income over the life of the warranty contract. 2. Premiums, coupons, loyalty programs, and other bonuses offered to customers: result in the likely existence of a liability at the date of the financial statements....
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