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Quiz

ACTG 2P32 Quiz: current Liabilities

3 Pages
28 Views
Spring 2018

Department
Accounting
Course Code
ACTG 2P32
Professor
Parunchana Pacharn
Study Guide
Quiz

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Current Liabilities
ASPE (sections 1510,
3856)
IFRS (IFRS1,7,9, IAS 1)
Nature
As a balance sheet
classification, current
liabilities shall include
amounts payable within
one year from the date of
the balance sheet or within
the normal operating cycle,
when that is longer than a
year. The normal operating
cycle shall correspond with
that used for current assets.
The current liability
classification shall also
include the current portion
of future income tax
liabilities
A liability is classified as
current under IFRS when
one of the following
conditions is met:
1. It is expected to be
settled in the entity’s
normal operating cycle.
2. It is held primarily for
trading.
3. It is due within 12
months from the end of the
reporting period.
4. The entity does not have
an unconditional right to
defer its settlement for at
least
12 months after the date of
the statement of financial
position.
Recognition
An entity shall recognize a
financial asset or a
financial liability when the
entity becomes a party to
the contractual provisions
of the financial instrument
An entity shall recognize a
financial liability in its
statement of financial
position when, and only
when, the entity becomes
party to the contractual
provisions of the
instrument. When an entity
first recognizes a financial
liability, it shall classify it
in accordance with
paragraphs 4.2.1 and 4.2.2
and measure it in
accordance with
paragraphs 5.1.1
Measurement Initial
Financial liabilities are
recognized initially at their
fair value. When liabilities
are short-term in nature,
they are usually accounted
for, on practical grounds,
at their maturity value.
Financial liabilities are
recognized initially at their
fair value
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Description
Current Liabilities ASPE (sections 1510, IFRS (IFRS1,7,9, IAS 1) 3856) Nature As a balance sheet A liability is classified as classification, current current under IFRS when liabilities shall include one of the following amounts payable within conditions is met: one year from the date of 1. It is expected to be the balance sheet or within settled in the entitys the normal operating cycle, normal operating cycle. when that is longer than a 2. It is held primarily for year. The normal operating trading. cycle shall correspond with 3. It is due within 12 that used for current assets. months from the end of the The current liability reporting period. classification shall also 4. The entity does not have include the current portion an unconditional right to of future income tax defer its settlement for at liabilities least 12 months after the date of the statement of financial position. Recognition An entity shall recognize a An entity shall recognize a financial asset or a financial liability in its financial liability when the statement of financial entity becomes a party to position when, and only the contractual provisions when, the entity becomes of the financial instrument party to the contractual provisions of the instrument. When an entity first recognizes a financial liability, it shall classify it in accordance with paragraphs 4.2.1 and 4.2.2 and measure it in accordance with paragraphs 5.1.1 Measurement Initial Financial liabilities are Financial liabilities are recognized initially at their recognized initially at their fair value. When liabilities fair value are shortterm in nature, they are usually accounted for, on practical grounds, at their maturity value.
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