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ACCO320B > Chapter 13: Non-financial and Current Liabilities > Flashcards

Chapter 13: Non-financial and Current Liabilities Flashcards

1
Q

The claims rate of warranties

A

% of sales spent on claims

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2
Q

The accrual rate of warranties

A

% of sales set aside as warranty accruals

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3
Q

IFRS: Liability

A

present obligation to transfer economic resources as a result of past events.

All of the following must be satisfied:
1. The entity has an obligation
2. Obligation is to transfer economic resources
3. Obligation results from past event

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4
Q

ASPE: Liability

A

obligation that arises from past transactions or events, which MAY results in a transfer of assets or provision of services.

all of the following must be satisfied:
1. embody a duty or responsibility to others
2. little or no discretion to avoid the duty
3. transaction or event has already occurred; exists AT DATE OF SFP

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5
Q

Constructive Obligation

A

past or present company practice shows that the entity acknowledges a potential economic burden.

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6
Q

IFRS/ASPE: Recognition Requirements

A

non-financial liabilities are recognized only if it is probable that the obligation would result in an outflow of cash or other economic resource.

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7
Q

IFRS/ASPE: Financial Liability

A

contractual obligation that either 1. delivers cash or another asset. 2. exchanges financial assets under conditions that are unfavourable.

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8
Q

Measurement of Financial Liabilities

A

At FV (Price + transaction costs), then, accounted at amortized cost.

Changes in transaction costs after acquisition are accounted for as a profit or loss through Net income

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9
Q

ASPE: Non-Financial Liabilities

A

Non-payable by cash

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10
Q

IFRS: Non-Financial Liabilities

A

Measured at best estimate of market value. Ex: Unearned Revenue, loyalty programs

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11
Q

IFRS: provisions

A

liabilities of uncertain timing or amount

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12
Q

Operating Cycle

A

period of time between acquiring the goods and services for processing in operations and receiving cash from the eventual sale of the processed Goods and services
Normal: <=12 months
Abrnomarl: >1yr

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13
Q

IFRS: Current liability

A

1 of the following is met:
1. expected to be settled within operating cycle
2. held for trading
3. due within 12 months of SFP reporting
4. no right to defer settlement for at least 12 months after SFP

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14
Q

ASPE: Current Liability

A

Payable within 1 year of balance sheet or within operating cycle

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15
Q

Line of Credit / Revolving Debt

A

agreement between company and bank to make multiple borrowings up to a negotiated limit

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16
Q

Accounts Payable

A

balances owed to others for goods, supplies, or services that are purchased on open account

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17
Q

Notes Payable

A

Written promise to pay a certain sum of money on a specified future date and may arise from purchases, financing, or other transactions

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18
Q

Types of notes payables

A

interest-bearing & non-interest-bearing

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19
Q

Zero-interest-Bearing Note issued

A

included in the face amount. The interest is the difference between the amount received and the amount payable at maturity

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20
Q

Current Maturities of Long-term Debt

A

bonds, mortgage notes and others that mature within 12 months from the date of sfp. Only the maturing portion of a L-T debt is reported as a current liability

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21
Q

Due on Demand

A

Callable Debt: callable by the creditor,

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22
Q

When is debt callable?

A

Violation of debt agreement, failure to maintain minimum equity or debt ratios

23
Q

IFRS: Debt violation

A

always payable, even if lender does not demand payment

24
Q

ASPE: Debt violation

A

current unless one of the following is met:
1. creditor waives in writing the covenant requirement
2. violation has been cured or rectified within the grace period that is allowed

25
Q

IFRS: Short-term Debt Expected to be refinanced

A

current liability, unless refinancing agreement exists at the date of SFP + at own discretion

26
Q

ASPE: Short-term Debt Expected to be refinanced

A

current liability, unless there is evidence by issuance date that it will be refinanced, then it is a long-term liability

27
Q

Dividend Payable

A

amount that a corporation owes to its shareholders because the BOD has authorized a dividend payment

28
Q

Preferred Dividends in arrears

A

undeclared dividends on cumulative preferred shares

29
Q

Rent and Royalties payable

A

a contractual agreement in which payments are conditional on the amount of revenue that is earned or the quantity of product that is produced or extracted

30
Q

Customer Advances / Returnable Cash Deposits

A

current liability, deposits received from customers to guarantee a future obligation

31
Q

Value-added tax

A

added onto the goods and services provided by each taxable entity

32
Q

Types of compensated absences

A

Accumulating and non-accumulating

33
Q

unconditional obligation (Benefits)

A

vacation pay

34
Q

Vested rights

A

benefits that accumulate with service

35
Q

accumulated rights

A

rights accrue with employee servicen

36
Q

Non-accumulating compensated absences

A

entitled to by virtue of their employment (maternity leave)

37
Q

Restorative Activities for AROs

A
  1. Decommissioning nuclear facilities
  2. dismantling, restoring, and reclaiming oil and gas properties
  3. closure, reclamation, and removal of mining facilities
  4. Closure and post-closure remediation of landfills
38
Q

IFRS: ARO Production costs

A

added to inventory and ARO

39
Q

ASPE: ARO production costs

A

added to asset and ARO

40
Q

IFRS/ASPE interest Expense for ARO

A

IFRS: Interest Expense
ASPE: Accretion Expense

41
Q

Bifurcation

A

separation of the proceeds into two or more revenue amounts for the various deliverables promised (Service-type Warranties)

42
Q

Assurance-type Warranty

A

expense-based approach, used for ASPE

43
Q

Service-type Warranty

A

Revenue-based approach, used for IFRS

44
Q

Onerous Contract

A

costs of providing the service are more than the unearned revenue

45
Q

unearned revenue

A

received cash before delivering goods or services

46
Q

contingency

A

existing condition with uncertain gain or loss amount

47
Q

Contingent liability

A

whole population of existing or possible obligations

48
Q

Financial Guarantees

A

In this situation, one party (the guarantor) contracts to reimburse a second party for a loss incurred if a third party (the debtor) does not make required payments when due

49
Q

Executory Contracts

A

neither party has performed obligations

50
Q

Liquidity Ratios

A
  1. net cash flow
  2. Turnover ratio for receivables
  3. turnover ratio for inventory
  4. Current Ratio
  5. Acid-test ratio
  6. Days payable outstanding
51
Q

Current ratio

A

Current assets / Current Liability

52
Q

Acid-test Ratio

A

(Cash + Marketable Securities + Net Receivables) / Current liabilities

53
Q

Days Payable Outstanding

A

Avg. Trade Acc. Payable / Avg. Daily CoGS or / Avg. daily cost of total operating expenses

ACCO320B (2 decks)

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