Test Bank For Intermediate Accounting: Volume 1, 11th Canadian Edition

Preview (16 of 624 Pages)

100%

Purchase to unlock

Test Bank For Intermediate Accounting: Volume 1, 11th Canadian Edition - Page 1 preview image

Loading page ...

Copyright © 2016 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this pageis prohibitedCHAPTER 13NON-FINANCIAL AND CURRENT LIABILITIESCHAPTER STUDY OBJECTIVES1.Understand the importance of non-financial and current liabilities from a businessperspective.Cash flow management is a key control factor for most businesses. Takingadvantage of supplier discounts for prompt payment is one step companies can take. Control ofexpenses and related accounts payable can improve the efficiency of a business, and can beparticularly important during economic downturns.2.Define liabilities, distinguish financial liabilities from other liabilities, and identify howthey are measured.Liabilities are defined as present obligations of an entity arising from pasttransactions or events that are settled through a transfer of economic resources in the future.They must be enforceable on the entity. Financial liabilities are a subset of liabilities. They arecontractual obligations to deliver cash or other financial assets to another party, or to exchangefinancial instrumentswith another party under conditions that are potentially unfavourable.Financial liabilities are initially recognized at fair value, and subsequently either at amortizedcost or fair value. ASPE does not specify how non-financial liabilities are measured.However,unearned revenues are generally measured at the fair value of the goods or services to bedelivered in the future, while others are measured at the best estimate of the resources neededto settle the obligation. Under IFRS, non-financial liabilities other than unearned revenues aremeasured at the best estimate of the amount the entity would rationally pay at the date of thestatement of financial position to settle the present obligation.3.Define current liabilities and identify and account for common types of currentliabilities.Current liabilities are obligations that are payable within one year from the date of thestatement of financial position or within the operating cycle if the cycle is longer than a year.IFRS also includes liabilities held for trading and any obligation where the entity does not havean unconditional right to defer settlement beyond 12 months after the date of the statement offinancial position. There are several types of current liabilities. The most common are accountsand notes payable, and payroll-related obligations.4.Identify and account for the major types of employee-related liabilities.Employee-related liabilities include (1) payroll deductions, (2) compensated absences, and (3) profit-sharing and bonus agreements. Payroll deductions are amounts that are withheld fromemployees and result in an obligation to the government or other party. The employer’smatching contributions are also included in this obligation. Compensated absences earned byemployees are company obligations that are recognized as employees earn an entitlement tothem, as long as they can be reasonably measured. Bonuses based on income are accrued asan expense and liability as the income is earned.

Preview Mode

This document has 624 pages. Sign in to access the full document!

Report

Study Now!

Document Details

Related Documents

Solution Manual for Intermediate Accounting Volume 1, Tenth Canadian Edition

Accounting

Master Managerial Accounting Techniques

Controlling and Reporting of Real Assets

Accounting Audit Final Exam MCQs 2015

Sarbanes Oxley Act, GAAP and IFRS

Team A Week 5 Problems

Understanding Internal Control and Audit Processes

Decision Making with Managerial Accounting

Government wide statements and Fund statements

Company

Explore

Study Tools