ACCT 1201 Chapter Notes - Chapter 9: Contingent Liability, Operating Lease
26 Jan 2015
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Fica taxes: social security, employer and employee put equal amounts. Notes payable: current portion of long-term debt, deferred revenues, estimated liabilities reported on the balance sheet, contingent liability (reported in the notes) A potential liability that has arisen as the result of a past even; it is not an effective liability until some future event occurs. Probable: the chance that the future events will occur is high. Reasonably possible: the chance is more that remote but less than likely. Term is more than 75% of the asset"s expected economic life. Ownership is returned to the lessee at the end. Contract permits the lessee to purchase the asset lower than its fair market value. The present value of the asset is 90% or more of the fair market value: operating lease. Does not meet any criteria; no record of an asset or liability: capital lease. Meets at least 1 criteria; record asset and liability: present value.
