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Current Liabilities

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Dan Andrews

on 15 February 2018

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Transcript of Current Liabilities

How do we define current?
Compensated absences
Contingency: Defined
Short-Term Obligations Expected to be Refinanced
Short-term debt must be excluded from current liabilities if?
it is to be refinanced on a long-term basis, and (intent)
the entity demonstrates the ability to complete the refinancing.
Current Liab’s are reported at full maturity value (not PV)
Current Liab’s are listed in order of maturity

Contingencies that meet only one criteria (probable or estimatable) should be disclosed
Some contingencies must be disclosed even if the possibility is remote:
Guarantee of others debt
Stand by letters of credit
Guarantee to repurchase AR
In general, what is a liability?
Social Security Taxes
Unemployment Taxes
Income Tax Withholding
State Withholding Taxes
absences from employment for which employees are paid
A liability for such absences must be accrued if:
Relates to services already rendered
Relates to employee’s vested or accumulated rights
Payment of the compensation is probable, and the amount can be reasonably estimated.
The liability is recognized in the year earned by employees
An existing condition involving uncertainty as to possible gain or loss that will ultimately be resolved when one or more future events occur or when such event or events fail to occur
Gain contingencies are not accrued!
Loss contingencies involve situations of possible loss that are dependent on some future event(s).
The likelihood of occurrence of the event may be:
Remote (slight)

Reasonably possible (more than remote but less than likely)

Probable (likely)
Probable (likely)

Reasonably possible

Remote (slight)


Probable future sacrifices of economic benefits arising from present obligations to transfer assets or to provide services in the future as a result of past transactions or events
Accounts Payable
Notes Payable (example)
Current Maturities of LTD

Dividends Payable
(3 dates?)
Unearned Revenues
Sales Tax Payable (Example)
Property Tax Payable
Income Tax Payable
Insurance Recoveries can be
DISCLOSED if deemed probable
Full transcript