财务会计FA_ch

1、财务会计FA3_ch13School of Management,HUSTCurrent Liabilities and ContingenciesChapter 13Intermediate Accounting12th EditionKieso, Weygandt, and WarfieldChapter Prepared by Coby Harmon, University of California, Santa Barbara13-1School of Management,HUSTLearning Objectives1.Describe the nature, type, and

2、 valuation of current liabilities.2.Explain the classification issues of short-term debt expected to be refinanced.3.Identify types of employee-related liabilities.4.Identify the criteria used to account for and disclose gain and loss contingencies.5.Explain the accounting for different types of los

3、s contingencies.6.Indicate how to present and analyze liabilities and contingencies.Chapter 13-2School of Management,HUSTCurrent Liabilities and ContingenciesCurrent Presentation and ContingenciesLiabilitiesAnalysisWhat is a Gain Presentation of liability?contingenciescurrent liabilitiesWhat is a Lo

4、ss current liability?contingenciesPresentation of contingenciesAnalysis of current liabilitiesChapter 13-3School of Management,HUSTWhat is a Liability?FASB, defines liabilitiesas: “probable future sacrifices of economic benefitsarising from present obligations of a particular entity to transfer asse

5、ts or provide services to other entities in the future as a result of past transactions or events.”Chapter 13-4School of Management,HUSTWhat is a Liability?IASB, defines liabilitiesas: A liability is ap resentobligation of the entity arising from past events, the settlement of which is expected to r

6、esult in ano utflow from the entity of resourcesembodying economic benefits. One key characteristic is that the entity cannot avoid settling the obligation. That is, there is little or no discretion to avoid the future outflow of resources.Chapter 13-5School of Management,HUSTExample: liabilitylFor

7、example, on June 10, Yuri Androv enters into a contract to deliver 10 metric tonnes of coal to Aleksa Shastri on December 1. Shastri agrees to pay 2,000 for the delivery. lThe question then is, does Shastri have a liability on her books as of June 11? Chapter 13-6School of Management,HUSTWhat is a L

8、iability?According to the FASB, a liability has three essential characteristics:(a) it is a present obligation that entails settlement by probable future transfer or use of cash, goods, or services; (b) it is an unavoidable obligation; and (c) the transaction or other event creating the obligation h

9、as already occurred.Chapter 13-7School of Management,HUST中国企业会计准则l第二十三条负债是指企业过去的交易或者事项形成的、预期会导致经济利益流出企业的现时义务。现时义务是指企业在现行条件下已承担的义务。未来发生的交易或者事项形成的义务，不属于现时义务，不应当确认为负债。l第二十四条符合本准则第二十三条规定的负债定义的义务，在同时满足以下条件时，确认为负债：(一)与该义务有关的经济利益很可能流出企业；(二)未来流出的经济利益的金额能够可靠地计量。l第二十五条符合负债定义和负债确认条件的项目，应当列入资产负债表；符合负债定义、但不符合负债确

10、认条件的项目，不应当列入资产负债表。Chapter 13-8School of Management,HUSTWhat is a Current Liability?Current liabilitiesare “obligations whose liquidation is reasonably expected to require use of existing resources properly classified as current assets, or the creation of other current liabilities.”Thus, the definiti

11、on of current liabilities for a particular industry will depend upon the time perio(do perating cycle or one year, whichever is longer)used in defining current assets in that industry.Chapter LO 1 Describe the nature, type, and valuation of current liabilities.13-9School of Management,HUSTWhat is a

12、Current Liability?Typical Current Liabilities:Accounts payable.Customer advances and deposits.Notes payable.Unearned revenues.Current maturities of long-term debt.Sales taxes payable.Short-term obligations Income taxes payable.expected to be refinanced.Employee-related Dividends payable.liabilities.

13、Chapter LO 1 Describe the nature, type, and valuation of current liabilities.13-10School of Management,HUSTChapter 13-11School of Management,HUSTWhat is a Current Liability?Accounts Payable (trade accounts payable)Balances owed to others for goods, supplies, or services purchased on open account.Ari

14、se because of time lag between receipt of goods or services and the payment for them. The terms of the sale (e.g., 2/10, n/30) state period of extended credit.Chapter LO 1 Describe the nature, type, and valuation of current liabilities.13-12School of Management,HUSTWhat is a Current Liability?Notes

15、PayableWritten promises to pay a certain sum of money on a specified future date.Arise from purchases, financing, or other transactions.Notes classified as short-term or long-term.Notes may be interest-bearing or zero-interest-bearing.Chapter LO 1 Describe the nature, type, and valuation of current

16、liabilities.13-13School of Management,HUSTWhat is a Current Liability?E13-2(Accounts and Notes Payable)The following are selected 2007 transactions of Sean Astin Corporation.Sept. 1-Purchased inventory from Encino Company on account for $50,000. Astin records purchases gross and uses a periodic inve

17、ntory system.Oct. 1-Issued a $50,000, 12-month, 8% note to Encino in payment of account.Oct. 1-Borrowed $50,000 from the Shore Bank by signing a 12-month, zero-interest-bearing $54,000 note.Chapter LO 1 Describe the nature, type, and valuation of current liabilities.13-14School of Management,HUSTWha

18、t is a Current Liability?Sept. 1-Purchased inventory from Encino Company on account for $50,000. Astin records purchases gross and uses a periodic inventory system.Sept. 1Purchases 50,000Accounts payable50,000Chapter LO 1 Describe the nature, type, and valuation of current liabilities.13-15School of

19、 Management,HUSTWhat is a Current Liability?Oct. 1-Issued a $50,000, 12-month, 8% note to Encino in payment of account.Oct. 1Accounts payable 50,000Notes payable50,000Dec. 31Interest expense1,000Interest payable1,000($50,000 X 8% X 3/12) Chapter LO 1 Describe the nature, type, and valuation of curre

20、nt liabilities.13-16School of Management,HUSTWhat is a Current Liability?Oct. 1-Borrowed $50,000 from the Shore Bank by signing a 12-month, zero-interest-bearing $54,000 note.Oct. 1Cash 50,000Discount on notes payable4,000Notes payable54,000Dec. 31Interest expense1,000Discount on notes payable1,000(

21、$4,000 x 3/12) Chapter LO 1 Describe the nature, type, and valuation of current liabilities.13-17School of Management,HUSTChapter 13-18School of Management,HUSTWhat is a Current Liability?Current Maturities of Long-Term DebtExclude long-term debts maturing currently as current liabilities if they ar

22、e to be:1.Retired by assets accumulated that have not been shown as current assets,2.Refinanced, or retired from the proceeds of a new debt issue, or3.Converted into capital stock.Chapter LO 1 Describe the nature, type, and valuation of current liabilities.13-19School of Management,HUSTWhat is a Cur

23、rent Liability?Short-Term Obligations Expected to Be RefinancedExclude from current liabilities if both of the following conditions are met:1.Must intend to refinancethe obligation on a long-term basis.2.Must demonstrate an abilityto refinance:Actual refinancingEnter into a financing agreementChapte

24、r LO 2 Explain the classification issues of short-term 13-20debt expected to be refinanced.School of Management,HUSTWhat is a Current Liability?Short-Term Obligations Expected to be RefinancedNOMgmt. Intends of RefinanceClassify as Current YESLiabilityDemonstrates Ability to RefinanceNOYESActual Ref

25、inancing after Financing Agreement orbalance sheet date but before Noncancellable with Capable issue dateLenderExclude Short-Term Obligations from Current Liabilities and Reclassify as LT DebtChapter LO 2 Explain the classification issues of short-term 13-21debt expected to be refinanced.School of M

26、anagement,HUSTWhat is a Current Liability?E13-3(Refinancing of Short-Term Debt) On December 31, 2007, Hattie McDaniel Company had $1,200,000 of short-term debt in the form of notes payable due February 2, 2008. On January 21, 2008, the company issued 25,000 shares of its common stock for $38 per sha

27、re, receiving $950,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2008, the proceeds from the stock sale, supplemented by an additional $250,000 cash, are used to liquidate the $1,200,000 debt. The December 31, 2007, balance sheet is issued on February 23, 2008.Instruc

28、tionsShow how the $1,200,000 of short-term debt should be presented on the December 31, 2007, balance sheet, including note disclosure.Chapter LO 2 Explain the classification issues of short-term 13-22debt expected to be refinanced.School of Management,HUSTWhat is a Current Liability?Partial Balance

29、 SheetCurrent liabilities:Notes payable$ 250,000Long-term debt:Notes payable refinanced 950,000Total liabilities1,200,000Chapter LO 2 Explain the classification issues of short-term 13-23debt expected to be refinanced.School of Management,HUSTWhat is a Current Liability?Dividends PayableAmount owed

30、by a corporation to its stockholders as a result of board of directors authorization.Generally paid within three months.Undeclared dividends on cumulative preferred stock not recognized as a liability.Dividends payable in the form of shares of stock are not recognized as a liability. Reported in equ

31、ity.Chapter LO 2 Explain the classification issues of short-term 13-24debt expected to be refinanced.School of Management,HUSTWhat is a Current Liability?Customer Advances and DepositsInclude returnable cash deposits received from customers and employees.May be classified as current or long-term.Cha

32、pter LO 2 Explain the classification issues of short-term 13-25debt expected to be refinanced.School of Management,HUSTWhat is a Current Liability?Unearned RevenuesPayment received before delivering goods or rendering services?Unearned and Earned Revenue AccountsIllustration 13-3Chapter LO 2 Explain

33、 the classification issues of short-term 13-26debt expected to be refinanced.School of Management,HUSTWhat is a Current Liability?BE13-5Game Pro Magazine sold 10,000 annual subscriptions on August 1, 2007, for $18 each. Prepare Game Pros August 1, 2007, journal entry and the December 31, 2007, annua

34、l adjusting entry.Aug. 1Cash 180,000Unearned revenue180,000(10,000 x $18)Dec. 31Unearned revenue 75,000Subscription revenue75,000($180,000 x 5/12 = $75,000) Chapter LO 2 Explain the classification issues of short-term 13-27debt expected to be refinanced.School of Management,HUSTWhat is a Current Lia

35、bility?Sales Taxes PayableRetailers must collect sales taxes from customers on transfers of tangible personal property and on certain services and then remit to the proper governmental authority.Chapter LO 2 Explain the classification issues of short-term 13-28debt expected to be refinanced.School o

36、f Management,HUSTWhat is a Current Liability?BE13-6Flintstones Corporation made credit sales of $30,000 which are subject to 6% sales tax. The corporation also made cash sales which totaled $19,610 including the 6% sales tax. (a) prepare the entry to record Flintstones credit sales. (b) Prepare the

37、entry to record Flintstones cash sales.Accounts receivable 31,800Sales30,000Sales tax payable1,800($30,000 x 6% = $1,800)Cash 19,610Sales18,500Sales tax payable1,110($19,610 1.06 = $18,500) Chapter LO 2 Explain the classification issues of short-term 13-29debt expected to be refinanced.School of Man

38、agement,HUSTWhat is a Current Liability?Income Tax PayableBusinesses must prepare an income tax return and compute the income tax payable resulting from the operations of the current period.Taxes payable are a current liabilityCorporations must make periodic tax payments throughout the year.Differen

39、ces between taxable income and accounting income sometimes occur( Chapter 19).Chapter LO 2 Explain the classification issues of short-term 13-30debt expected to be refinanced.School of Management,HUSTChapter 13-31School of Management,HUSTWhat is a Current Liability?Employee-Related LiabilitiesAmount

40、s owed to employees for salaries or wages are reported as a current liability.In addition, current liabilities may include:?Payroll deductions.?Compensated absences.?Bonuses (Appendix 13A).Chapter LO 3 Identify types of employee-related liabilities.13-32School of Management,HUSTWhat is a Current Lia

41、bility?Payroll DeductionsTaxes:?Social Security Taxes?Unemployment Taxes?Income Tax WithholdingChapter LO 3 Identify types of employee-related liabilities.13-33School of Management,HUSTWhat is a Current Liability?ExerciseAssume a weekly payroll of $10,000 entirely subject to F.I.C.A. and Medicare (7

42、.65%), federal (0.8%) and state (4%) unemployment taxes, with income tax withholding of $1,320 and union dues of $88 deducted. The company records the salaries and wages paidand the employee payroll deductions as follows:Journal entryto record salaries and wages paid:Salaries and wages expense 10,00

43、0Withholding taxes payable1,320F.I.C.A taxes payable765Union dues payable88Cash7,827Chapter LO 3 Identify types of employee-related liabilities.13-34School of Management,HUSTWhat is a Current Liability?ExerciseAssume a weekly payroll of $10,000 entirely subject to F.I.C.A. and Medicare (7.65%), fede

44、ral (0.8%) and state (4%) unemployment taxes, with income tax withholding of $1,320 and union dues of $88 deducted. The company records the salaries and wages paidand the employee payroll deductions as follows:Journal entryto record employer payroll taxes:Payroll tax expense 1,245F.I.C.A taxes payab

45、le765Federal unemployment tax payable80State unemployment tax payable 400Chapter LO 3 Identify types of employee-related liabilities.13-35School of Management,HUSTWhat is a Current Liability?Compensated AbsencesPaid absences for vacation, illness, and holidays.Accrue a liability if all the following

46、 conditions exist.The employers obligation is attributable to Can not? employees services already rendered.Disclosure.The obligation relates to rights that vest or accumulate.Payment of the compensation is probable.The amount can be reasonably estimated.Chapter LO 3 Identify types of employee-relate

47、d liabilities.13-36School of Management,HUSTWhat is a Current Liability?Accumulated rights:can Compensated Absencesbe carried forward to Paid absences forf uvtaucraet iopne,r iioldlnse sifs ,n aont d holidays.used in the period Vested rights:an obligation to Accrue a liability if all the following c

48、onditions exist.earned.pay employee exists even if The employers obligation is attributable to employment is terminated.employees services already rendered.The obligation relates to rights that vest or accumulate.Payment of the compensation is probable.Example:Page 630The amount can be reasonably es

49、timated.Chapter LO 3 Identify types of employee-related liabilities.13-37School of Management,HUSTWhat is a Current Liability?Bonus AgreementsResult in payments to certain or all employees in addition to their regular salaries or wages.Bonuses paid are an operating expense.Unpaid bonuses should be r

50、eported as a current liability. Example:Page 631Chapter LO 3 Identify types of employee-related liabilities.13-38School of Management,HUSTExample:002177-2008l（21）职工薪酬：l于会计期间，将应付的职工薪酬确认为负债，按受益对象分别计入产品或劳务成本、当期费用或固定资产或无形资产成本。根据有关规定，本公司按照月工资额的一定比例提取保险费和公积金，并按月向劳动和社会保障机构缴纳，相应的支出计入当期成本或费用。Chapter 13-39Sch

51、ool of Management,HUSTChapter 13-40School of Management,HUSTContingencies“An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain con或t有in事ge项n，c是y)指o过r去 lo的s交s 易(lo或s者s contingency)事项形成的，其结果须由某些未来to an enterprise that will ultimately be resolved 事项的

52、发生或不发生才能决定的不确定事项。when one or more future events occur or fail to occur.”*“Accounting for Contingencies,”S tatement of Financial Accounting Standards No. 5( Stamford, Conn.: FASB, 1975), par. 1Chapter LO 4 Identify the criteria used to account for and 13-41disclose gain and loss contingencies.School

53、of Management,HUSTGain ContingenciesTypical Gain Contingencies are:Possible receipts of monies from gifts, donations, and bonuses.Possible refunds from the government in tax disputes.Pending court cases with a probable favorable outcome.Tax loss carryforwards (Chapter 19).Gain contingencies aren ot

54、recorded.Disclosed only if probability of receipt is high.Chapter LO 4 Identify the criteria used to account for and 13-42disclose gain and loss contingencies.School of Management,HUSTLoss ContingenciesContingent LiabilityThe likelihood that the future event will confirm the incurrence of a liabilit

55、y can range from probable to remote.FASB uses three areas of probability:Probable.Reasonably possible.Remote.Chapter LO 4 Identify the criteria used to account for and 13-43disclose gain and loss contingencies.School of Management,HUSTLoss ContingenciesProbabilityAccountingProbableAccrueReasonablyFo

56、otnotePossibleRemoteIgnoreChapter LO 4 Identify the criteria used to account for and 13-44disclose gain and loss contingencies.School of Management,HUSTChapter 13-45School of Management,HUSTl第四条与或有事项相关的义务同时满足下列条件的，应当确认为预计负债：（一）该义务是企业承担的现时义务；（二）履行该义务很可能导致经济利益流出企业；（三）该义务的金额能够可靠地计量。l第十三条企业不应当确认或有负债和或有资

57、产。或有负债，是指过去的交易或者事项形成的潜在义务，其存在须通过未来不确定事项的发生或不发生予以证实；或过去的交易或者事项形成的现时义务，履行该义务不是很可能导致经济利益流出企业或该义务的金额不能可靠计量。Chapter 13-46School of Management,HUSTLoss ContingenciesBE13-10Justice League Inc. is involved in a lawsuit at December 31, 2007. (a) Prepare the December 31 entry assuming it is probable that Just

58、ice League will be liable for $700,000 as a result of this suit. (b) Prepare the December 31 entry, if any, assuming it niso t probable that Justice League will be liable for any payment as a result of this suit.(a)Lawsuit loss 700,000Lawsuit liability700,000(b)No entry is necessary. The loss is not

59、 accrued because it is not probable that a liability has been incurred at 12/31/07.Chapter LO 4 Identify the criteria used to account for and 13-47disclose gain and loss contingencies.School of Management,HUSTLoss ContingenciesCommon loss contingencies:1.Litigation, claims, and assessments. 2.Guarantee and warranty costs.3.