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    Chapter 1 - Current Liabilities

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    kkvn.pascual
    The document discusses the characteristics and classifications of liabilities for financial accounting reporting. It defines current liabilities as obligations that are due to be settled within one year or the normal operating cycle. Specific current liability types are listed along with the requisites to qualify as a current liability. Rules for refinancing liabilities and treating breaches of covenants are also outlined.

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    Chapter 1 - Current Liabilities

    Uploaded by

    kkvn.pascual
    6 views2 pages
    The document discusses the characteristics and classifications of liabilities for financial accounting reporting. It defines current liabilities as obligations that are due to be settled within one year or the normal operating cycle. Specific current liability types are listed along with the requisites to qualify as a current liability. Rules for refinancing liabilities and treating breaches of covenants are also outlined.

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    CHAPTER 1- CURRENT LIABILITIES

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    The document discusses the characteristics and classifications of liabilities for financial accounting reporting. It defines current liabilities as obligations that are due to be settled within one year or the normal operating cycle. Specific current liability types are listed along with the requisites to qualify as a current liability. Rules for refinancing liabilities and treating breaches of covenants are also outlined.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    6 views2 pages

    Chapter 1 - Current Liabilities

    Uploaded by

    kkvn.pascual
    The document discusses the characteristics and classifications of liabilities for financial accounting reporting. It defines current liabilities as obligations that are due to be settled within one year or the normal operating cycle. Specific current liability types are listed along with the requisites to qualify as a current liability. Rules for refinancing liabilities and treating breaches of covenants are also outlined.

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    © All Rights Reserved
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    You are on page 1of 2

    FINANCIAL ACCOUNTING REPORTING

    LIABILITIES

    CHARACTERISTICS & CLASSIFICATIONS OF LIABILITIES

    CHARACTERISTICS CURRENT LIABILITIES 1. PRESENT OBLIGATION

    2. ARISING FROM PAST EVENTS


     Legal/Contract
     Constructive

    SPECIFIC CURRENT LIABILITIES 3. SETTLEMENT THROUGH OUTFLOW OF


    ECONOMIC RESOURCES
     Accounts Payable
     Cash
     Unearned Income
     Non-Cash
    CURRENT  Accrued Expenses
     Services
    LIABILITIES  Payroll Taxes Payable
     Escrow

    FINANCIAL LIABILITIES
    MEASUREMENT
    NON-FINANCIAL LIABILITIES
    CLASSIFICATION
    CURRENT
    PRESENTATION
    NON-CURRENT

     NORMAL OPERATING CYCLE


    REQUISITES
     PURPOSE OF TRADING
    OF CURRENT
    LIABILITIES  SETTLED WITHIN 12 MONTHS
     DOES NOT HAVE UNCONDITIONAL RIGHT TO DEFER SETTLEMENT
    Note: If the liability does not qualify on any of the above requisites, then it is non-current

    RULES ON REFINANCING

    WITH UNCONDITIONAL RIGHT TO REFINANCE NCL

    REFINANCING GR: CL
    RULES ON BREACH OF COVENANTS REF. WAS MADE ON OR
    BEFORE YEAR END
    WITHOUT NCL
    UNCONDITIONAL RIGHT
    TO REFINANCE
    REF. WAS MADE AFTER CL
    YEAR END

    NO GRACE PERIOD:
    BREACH OF
    CURRENT LIABILITY
    COVENANT
    AFTER BALANCE SHEET DATE
    CURRENT LIABILITY GRACE PERIOD LESS THAN 12 MONTHS
    GRACE PERIOD
    CURRENT LIABILITY
    ON OR BEFORE BALANCE
    SHEET DATE
    GRACE PERIOD EQUAL/MORE THAN 12
    MONTHS
    NON-CURRENT LIABILITY
    FINANCIAL ACCOUNTING REPORTING
    LIABILITIES

    GIFT CERT

    DEPOSITS

    AMORTIZATION SHORTCUT

    PV PAYMENT x 1+effective interest rate – principal payment z

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