pre class balance sheet

Pre class balance sheet

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Unformatted text preview: value reduced by amor2za2on like deprecia2on for PP&E 9 What is a liability? •  Liability Ø།  A probable future economic sacrifice resul>ng from a current or past event Ø།  Examples: A future cash payment to a creditor; An obliga>on to deliver goods or services to a customer at a future date When do managers record a liability on the balance sheet? 1.  The future sacrifice is probable 2.  The amount of the obliga2on is known or can be es2mated 3.  The event that caused the obliga2on has already occurred 10 Should we recognize a liability? •  The company receives $10M for newspaper subscrip2ons covering the one- year period beginning next month. •  The company receives an invoice for $4M from its adver2sing agency for television adver2sements that appeared last month promo2ng the New Yor...
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This document was uploaded on 03/06/2014 for the course 15 15.502 at MIT.

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