ECON 2 Lecture Notes - Lecture 12: Accounts Payable, Current Liability, Special Purpose Entity

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Chapter 13 current liabilities, provisions, and contingencies. Liability: present obligation of a company arising from past events, the settlement of which is expected to result in an outflow from the company of resources, embodying economic benefits. 3 conditions: company has present obligation as result of past event. It is probably that an outflow of resources embodying economic benefits will be required to settle obligation: reliable estimate can be made of amount of obligation. Consideration payable: discounts, volume rebates, free products, or services, premium, printed coupons. Onerous contracts: unavoidable costs of meeting the obligations exceed the economic benefits expected to be received. Ability to make reasonable estimate of amount of loss. Must have occurred on or before the date of financial statements. Unfiled suits and unasserted claims & assessments, determine : probability that suit may be filed, probability of unfavorable outcome. Contingencies liabilities: not recognized in financial statements, because .

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