Chapter 11 - Current Liabilities and Contingencies

what are the 3 key elements of a liability

present obligation, arising from past event, expected outflow of economic benefits

what are the 2 parts to financial liabilities

liability that is a contractual obligation to deliver cash/financial asset to another party

what are the 3 measurement of liabilities

financial liabilities at FVPL (derivatives), other financial liabilities (bonds), non-financial liabilities

what are current liabilities

obligations that are expected to be settled within 1 year of BS or business’ normal operating cycle

why are current liabilities presented separately on BS

liabilities presented in order of liquidity for more reliable and relevant info, current for liquidity, long term for solvency

what is account payable

arise from paying G/S on account without written promise to pay

what are the 2 account payable concerns

cut off and gross vs. net method

what are non-trade payables

short term obligations that don’t arise from ordering G/S on account

what is HST/GST payable

sales tax collected on sale to customers

what is HST/GST recoverable

sales tax paid on their purchases (ITC)

what is a notes payable

note supported with a written promise to pay

what are the 2 types of notes payable

interest and non-interest bearing

recognition for customer loyalty programs

distinct PO fo originating revenue, to be recognized over time for deferred revenue

measurement for customer loyalty program

allocate transaction price to POs on relative stand alone basis, recognize award revenue in proportion to total points expected to be converted

what are the 2 features of customer loyalty programs

grant customer a material right to future G/S for free/discount and current and future performance obligation

what are the 2 distinct components of customer loyalty programs

regular revenue and award revenue

options at maturity of debt

repay debt, make arrangements with lender to refinance obligation

if borrower defaults on terms of non-current liability before YE and loan becomes payable on demand

borrower must classify obligation as current liability

if borrower defaults on terms of non-current liability before YE and lender agrees to provide grace period before YE

reclassify as current liability if grace period is less than 12 months after YE and keep as non-current liability if grace period more than 12 months

if borrower defaults on terms of non-current liability before YE and lender agrees to provide grace period after YE but before FS issued

reclassify as current liability and disclosure grace period details