ADM 1340 Lecture Notes - Lecture 20: Financial Statement, Deferral

• School: University of Ottawa
• Department: Administration
• Course: ADM 1340
• Professor: Qiu Chen

Document Summary

Today we are going to be finishing chapter 10. Journal entry in chapter 4 for refresher is recommended)! We are going to look at two special types of liabilities: provision liabilities: when the amount or the timing of the liability is uncertain it is referred to as provision. It must be recognized when an obligation has become present, payment is only probable and the amount can be estimated in a reliable manner. We are using are future services to settle this issue: once all three steps are fufilled we are going to write a journal entry. Ex: warranties for super clean co: for this year we can estimate potential repair cost as ,000 x 4% = ,000, debit cash ,000, we have to pay it because it is our liability. We credit inventory because we have to fix repairs (e. g. ,000 to repair vacuums under warrantee.