ACCT 352 Chapter Notes - Chapter 13: Book Value, Income Statement, Deferral

• School: McGill University
• Department: Accounting
• Course: ACCT 352
• Professor: Ralph Cecere

Document Summary

A liability is an obligation that arises from past transactions or events, which may result in a transfer of assets. A liability of an entity is a present economic obligation for which the entity is the obligor. Obligation is not contingent or conditional on a future event. Under ifrs and pe gaap, a financial liability is any liability that is a contractual obligation to either: Deliver cash or other financial asset to another party, or to exchange financial instruments with another party under conditions that are potentially unfavourable. Note that this definition require the liability to be based on an obligation that is created by a contract. Income taxes payable and other liabilities from lefisltation are not considered as financial liabilities. Financial liabilities are recognized originally at their fair value. After acquisition they can be measured at amortized cost (except those held for trading, such as derivatives, where fair value is used)