COMM321 Study Guide - Final Guide: Accounting, Audit Evidence, Retained Earnings
12 May 2013
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Liabilities obligations that are enforceable; can be conditional/unconditional. Unconditional obligation (ex. req. to pay interest on borrowed money) always recorded; if amount is uncertain: under ifrs: use best estimate at reporting date, under pe gaap: disclose in notes. Conditional obligation are dependent on other events; only record if event is more likely than not. Dell offer 3 yr phone support) legal obligations based on past behavior; must be included; entity acknowledges a potential economic burden. Current liabilities obligations due within the greater of 1 year and the operating cycle. Bank indebtedness bank loans due on demand or within 1 yr of b/s date (ex. operating line, term loans but loan covenants have been violated such as ebitda, d/e test, etc); loan can be called; goes in c/l. *loan convenant conditions you have to meet for loan to remain in good standing. Notes payable written promises; notes due within 1 year + current portion l-t notes.
