Current liabilties

Current Liability (CL) - IFRS 9 vs ASPE 1510

Contractual obligation to:

Deliver cash or another asset to another entity

Exchange financial assets/liabilities with entities under potentially unfavorable conditions

If obligation is to provide a good or service, this is a non-financial CL

Criteria to determine if current rather than non-current (1 of 3)

1. Settled in normal operating cycle

2. Held for trading

3. Due to be settled within 12 months of period end; cannot defer

CL recognition criteria must be met (3)

1. Entity has a present obligation - consider if it can be avoided

2. Obligation is to transfer economic resource - does not need to be certain

3. Exists due to past events - must occur prior to date of SFP

Initial measurement of CL, provided recognition is met

Measure at fair value plus/minus transaction costs

CL subsequent measurement

Not usually subsequently measured as they are settled within one period

If financial and if needed, remeasure at fair value with gains or loss to income

If non-financial, measure at amortized cost

Derecognition of CL

Derecognized when it no longer meets the 3 criteria - usually through settlement of resources

Accrue interest to date of settlement and remove liability from books

Examples of CL

A/P - Dr. Inv / Cr. A/P then Dr. A/P / Cr. Cash

ST N/P - Dr. Cash / Cr. N/P then Dr. N/P Dr. Interest expense / Cr. Cash

Bank indebtedness, bank loan and interest payable, dividends payable