财务会计学英文课件：ch9 Liabilities

1、Chapter 9LiabilitiesAccount for current liabilities and contingent liabilities2Copyright 2014 Pearson Education. Current Liabilities Obligations due within one year Two types: Known amounts Estimated amounts3Copyright 2014 Pearson Education. Current Liabilities: Known AmountAccounts payableShort-ter

2、m notes payableSales tax payableAccrued liabilitiesPayroll liabilitiesUnearned revenuesCurrent portion of long-term debt4Copyright 2014 Pearson Education. Current Liabilities: Known Amount Accounts payable Amounts owed for products or services purchased on account Short-term notes payable Due within

3、 one year Used to borrow cash or purchase asset Accrue interest5Copyright 2014 Pearson Education. Accounting for Short-Term Notes PayableCopyright 2014 Pearson Education. 6JOURNALDateAccounts and explanationDebitCreditMar 31Inventory 8,000 Note payable, short-term8,000Purchase of inventory by issuin

4、g a note payableDec 31Interest expense (8,000 x 10% x 9/12)600 Interest payable600Accrued interest on note payableAccounting for Short-Term Notes PayableCopyright 2014 Pearson Education. 7JOURNALDateAccounts and explanationDebitCreditMar 31Note payable, short-term8,000Interest payable600Interest exp

5、ense (8,000 x 10% x 3/12)200 Cash8,800To record payment of note payableSales Tax Payable Levied on retail sales Collected from customers and remitted to state8Copyright 2014 Pearson Education. JOURNALDateAccounts and explanationDebitCreditCash210,000 Sales200,000 Sales tax payable10,000Accrued Liabi

6、lities Result from expenses incurred but not yet paid Categories: Salaries and wages payable Interest payable Income taxes payable9Copyright 2014 Pearson Education. Payroll Major expense of most companies Many different forms: Salary Wage Commission10Copyright 2014 Pearson Education. JOURNALDateAcco

7、unts and explanationDebitCreditSalary expense Employee income taxes payable FICA taxes payable Salaries payablePayroll LiabilitiesCopyright 2014 Pearson Education. 11Employee income tax payableFICA tax payableSalaries payableUnearned Revenues Business receives cash before earning revenue Results in

8、a liability12Copyright 2014 Pearson Education. JOURNALDateAccounts and explanationDebitCreditCash Unearned revenueReceived advance payment from customerUnearned revenue RevenueEarned revenue that was collected in advanceCurrent Portion of Long-Term Debt Long-term debt often paid in installments Amou

9、nt of principal payable within one year Company reclassifies amount from long-term to current13Copyright 2014 Pearson Education. Estimated Current LiabilitiesProvision for Warranty RepairsContingent Liabilities14Copyright 2014 Pearson Education. Provision for Warranty Repairs Warranty expense is est

10、imated in the year product is sold Matching principle15Copyright 2014 Pearson Education. JOURNALDateAccounts and explanationDebitCreditWarranty expense Provision for Warranty RepairsTo accrue warranty expenseProvision for Warranty Repairs InventoryTo replace defective products sold under warrantyCon

11、tingent Liabilities Possible obligation that depends on future outcome of past events, or Present obligation that may, but probably will not, require outflow of resources, or Sufficiently reliable estimate of the amount of a present obligation cannot be made16Copyright 2014 Pearson Education. Long-T

12、erm LiabilitiesBonds payableNotes payable17Copyright 2014 Pearson Education. Bonds Payable Debts of issuing company Bond certificate states: Company name Principal Maturity date Interest rate Interest payment dates18Copyright 2014 Pearson Education. Types of BondsCopyright 2014 Pearson Education. 19

13、TermSerial SecuredUnsecured Bond Prices Quoted as percent of maturity value20Copyright 2014 Pearson Education. PremiumDiscountPrice above facePrice below faceCredit balanceDebit balanceMarket price decreases towards maturity valueMarket price increases towards maturity valueAt maturity dateFace valu

14、eMarketvalueTime Value of Money Dollar received today is worth more than one received in the future Dollar invested earns income Amount invested now to receive more later Present Value Present value depends on: Amount of future payment Length of time Interest rate21Copyright 2014 Pearson Education.

15、Interest Rates & Bond Prices Bonds always sold at market price Bonds present value Two interest rates set bond price Stated interest rate (coupon rate) Printed on bond certificate Determines cash interest paid to bondholders Market interest rate (effective interest rate) Demanded by investors fo

16、r loaning money Can fluctuate after bond issuance22Copyright 2014 Pearson Education. Stated rate usually differs from market rateCopyright 2014 Pearson Education. 23Issue Price of Bonds PayableCase AStated interest rate=Market interest rateTherefore,Issued at ParCase BStated interest rateMarket inte

17、rest rateTherefore,Issued at PremiumAccount for bonds payable and measure interest expense24Copyright 2014 Pearson Education. Issuing Bonds Payable at ParCopyright 2014 Pearson Education. 25JOURNALDateAccounts and explanationDebitCreditJan 1Cash50,000 Bonds payable50,000To issue bonds at parJul 1Int

18、erest expense2,250 Cash2.250To pay semi-annual interestIssuing Bonds Payable at ParCopyright 2014 Pearson Education. 26JOURNALDateAccounts and explanationDebitCreditBonds payable100,000 Cash100,000To pay bonds at maturityIssuing Bonds Payable at a DiscountCopyright 2014 Pearson Education. 27JOURNALD

19、ateAccounts and explanationDebitCreditCash96,149Discount on bonds payable3,851 Bonds payable100,000To issue bonds at a discountBalance Sheet PresentationCopyright 2014 Pearson Education. 28Balance SheetLong-term liabilities:Bonds payable$100,000Less: Discount on bonds payable(3,851)$96,149Interest P

20、ayment vs. Interest Expense29Copyright 2014 Pearson Education. Interest paymentFace valueStated interest rate 1/2Interest expenseCarrying amountMarket interest rate 1/2Bond Discount ExampleCopyright 2014 Pearson Education. 30Issue DateJanuary 1, 2010Face value$100,000Stated interest rate9%Interest p

21、aymentsSemi-annualMaturity dateJanuary 1, 2015Market interest rate10%Issue price$96,149Interest paid 4.5% semiannually$4,500Copyright 2014 Pearson Education. 31ABCDDDateInterest paymentInterest expenseDiscount amortizationDiscount balanceBond carrying amount1-10$3,851$96,1497-10$4,500$4,807$3073,544

22、96,4561-11$4,5004,8233233,22196,7791-15$4.5004,9614610100,000Copyright 2014 Pearson Education. 324,4004,6004,8005,00012345678910Interest ExpenseSemiannual Interest PaymentInterest ExpenseInterest PaymentDiscount AmortizationCopyright 2014 Pearson Education. 33 94,000 95,000 96,000 97,000 98,000 99,0

23、00 100,000 101,000 1234567891011Bond Carrying AmountSemiannual Interest PaymentsFace valueCarrying Amount increases to maturityCopyright 2014 Pearson Education. 34JOURNALDateAccounts and explanationDebitCredit2010Jul 1Interest expense4,807 Discount on bonds payable307 Cash4,500To pays semiannual int

24、erest and amortize bond discountDec. 31Interest expense4,823 Discount on bonds payable323 Interest payable4,500To accrue semiannual interest and amortise bond discount.35Balance SheetDecember 31, 2010Long-term liabilities:Bonds payable$100,000Less: Discount on bonds payable(3,221)$96,779Copyright 20

25、14 Pearson Education. Partial-Period Interest PaymentsCopyright 2014 Pearson Education. 36JOURNALDateAccounts and explanationDebitCreditDec. 31Interest expense2,880 Discount on bonds payable213 Interest payable2,667$96,000 carrying amount x 9% market rate x 4/12$100,000 face value x 10% market rate

26、x 4/12Bond Premium ExampleCopyright 2014 Pearson Education. 37Issue DateJanuary 1, 2010Face value$100,000Stated interest rate9%Interest paymentsSemi-annualMaturity dateJanuary 1, 2015Market interest rate8%Issue price$104,100Copyright 2014 Pearson Education. 38ABCDDDateInterest paymentInterest expens

27、ePremium amortizationPremium balanceBond carrying amount1-10$4,100$104,1007-10$4,500$4,164$3363,764103,7641-11$4,5004,1373493,415103,4151-15$4,5003,9555450100,000Copyright 2014 Pearson Education. 394,0004,2004,4004,60012345678910Interest ExpenseSemiannual Interest PaymentInterest ExpenseInterest Pay

28、mentPremium AmortizationCopyright 2014 Pearson Education. 40 99,000 100,000 101,000 102,000 103,000 104,000 105,000 1234567891011Bond Carrying AmountSemiannual Interest PaymentsFace valueCarrying Amount decreases to maturityStraight-Line Method41AmortizationDiscount or premiumNumber of interest paym

29、entsInterest expenseAmortizationInterest paymentORCopyright 2014 Pearson Education. Retiring Bonds Before Maturity Reasons to pay off bonds early Can relieve high interest payments Can borrow at a lower interest rate Callable feature Issuer can pay off bonds at a prearranged price Results in a gain

30、or loss42Copyright 2014 Pearson Education. Convertible Bonds Bondholders can exchange bonds for share Investors benefit from: Guaranteed receipt of principal and interest on bonds Potential for gains on shares43Copyright 2014 Pearson Education. Account for capital and operating leases44Copyright 201

31、4 Pearson Education. LeasesOPERATINGCAPITAL Lessee has right to use the asset Lessor retains risks and rewards of owing Lessee records Rent Expense Lessee has rights to use asset Lessee assumes risks and rewards of ownership and associated obligations Present value of lease payment capitalized45Copy

32、right 2014 Pearson Education. Capital Lease CriteriaCopyright 2014 Pearson Education. 46Transfer of title at end of leaseBargain purchase optionLease term 75% of useful lifePresent value of lease payments 90% of fair value of assetAccounting for Capital Leases Lessee will record the present value of

33、 lease payments on its books Depreciated in accordance to the entitys usual depreciation policy Lease payments made will be set off against lease interest expense, and remaining balance used to reduce the outstanding lease payment47Copyright 2014 Pearson Education. Journal Entries for Capital Leases

34、48Copyright 2014 Pearson Education. 20X1July 1Lease Asset43, 295 Lease Liability43,295To record capital lease ($10,000 per year for 5 years 5%).20X2June 30Lease Liability7,835Interest Expense2,165 Cash10,000To record first capital lease payment.On signing the lease on July 1 20X1On making 1st lease

35、payment on June 30 20X2 Lease Amortization Schedule49Copyright 2014 Pearson Education. PeriodBegin LLPaymentInterestPrincipalEnd LL1$ 43,295$10,000$ 2,165$ 7,835$35,4602$35,460$10,000$ 1,773$ 8,227$ 27, 2323$27,232$10,000$ 1,362$ 8,638$ 18,5944$18,594$10,000$ 930$ 9,070$ 9,5245$9,524$10,000$ 476$ 9,

36、524$ -0-Understand the advantages and disadvantages of borrowing50Copyright 2014 Pearson Education. Financing OperationsIssuing sharesRetained earningsIssuing bonds51Copyright 2014 Pearson Education. Earnings per SharePlan 1Plan 2Borrow $500,000 6%Issue $500,000 of sharesNet income before expansion$300,000$300,000Expected project income before interest & taxes$200,000$200,000Interest expense(30,000)0Income taxes (40%)(68,000)(80,000)Expected project net income102,000120,000T