Intermediate Accounting 12 Accounting and Reporting of Current and Contingent Liabilities.doc

Intermediate Accounting 12 Accounting and Reporting of Current and Contingent Liabilities
Accounting and Reporting of Current and
Contingent Liabilities
Chapter
12
Current Liabilities and Contingencies
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
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 events1>.”
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.
e taxes payable.
Employee-related liabilities.
LO 1 Describe the nature, type, and valuation of current liabilities.
What is a Current Liability?
Balances owed to others for goods, supplies, or services purchased on open account.
Accounts Payable (trade accounts payable)
LO 1 Describe the nature, type, and valuation of current liabilities.
Arise because of time lag between receipt of goods or services and the payment for them.
The terms of the sale (., 2/10, n/30) state period of extended credit.
What is a Current Liability?
Written promises to pay a certain sum of money on a specified future date.
Notes Payable
LO 1 Describe the nature, type, and valuation of current liabilities.
Arise from purchases, financing, or other transactions.
Notes clas