F5/M1 Payable and Accrued Liabilities

Question 1

Criteria for reclassifying short-term debt to long-term debt

Answer 1

1. Intent to refinance
2. Ability to refinance

Evidence:

1. Have actually refinanced before the FS are issued
2. Or, have a noncancelable refinancing agreement

Question 2

When to accrue for property taxes

Answer 2

Two methods;

1. Accrue prior to receiving the invoice
2. Record as payable upon receipt of invoice

Question 3

(T/F): When collecting sales tax from customers, the sales tax is NOT an expense

Answer 3

True; record a liability when received

Question 4

(T/F): Unemployment taxes and employers share of payroll taxes = Expense

Answer 4

True

Question 5

JE - Weekly Payroll

JE - Employers payroll tax expense

Answer 5

JE - Weekly Payroll
Dr: Salaries and Wages Expense 25000
Cr: FICA Taxes Payable 1913
Cr: Withholding Taxes Payable 3000
Cr: Cash 20087

JE - Payroll tax expense
Dr: Payroll tax expense 2413
Cr: FICA Taxes payable 1913
Cr: Unemployment taxes payable 500

Question 6

(T/F): FICA taxes and unemployment taxes = Employers Payroll Tax Expense

Answer 6

True

Question 7

(T/F): Bonuses should be recorded as Salaries and Wages Expense

Answer 7

True

Question 8

Criteria for accruing Compensated Absences

JE - Record Accrual of Compensated Absences

JE - Record Employee using absence at a higher salary

Answer 8

1. Services already rendered
2. Rights have vested
3. Payment is probable
4. Amount is reasonably estimable

JE
Dr: Salaries and Wages Expense
Cr: Salaries and Wages Payable

JE @ higher salary
Dr: Salaries and Wages Payable
Dr: Salaries and Wages expense
Cr: Cash

Question 9

Exit and Disposal Costs

Answer 9

• Severance Pay
• Costs to Terminate lease (not capital lease)
• Moving Employees to HQ or Equipment

Question 10

Criteria for recording a liability associated with Exit and Disposal Costs

Answer 10

• Announced Publicly, not just agreed upon at a meeting

- No discretion to avoid

Question 11

(T/F): Future operating losses expected to be incurred as part of the disposal are recorded when incurred

Answer 11

True; record in period occured

Question 12

JE to Record Asset Retirement Obligation

Answer 12

Dr: Asset Retirement Cost (Asset)
Cr: Asset Retirement Obligation (PV)

Question 13

(T/F): Asset Retirement Cost is capitalized to the asset and increases the carrying amount of the long-lived asset

Answer 13

True

Question 14

(T/F): Under IFRS, an ARO is referred to as a Decommissioning Liability

Answer 14

True; measured at best estimate

Question 15

Accretion expense every year increases the ARO

Answer 15

True;

JE
Dr: Accretion Expense
Cr: ARO

Question 16

Depreciation expense every year decreases the ARC

Answer 16

True;

JE
Dr: Depreciation Expense
Cr: ARC

Question 17

Cumulative Accretion Expense (+) Cumulative Depreciation Expense = ARO (Total Cost)

Answer 17

Formula

Question 18

(T/F): Payables classified as accounts payable usually do NOT involve Periodic Payments of Interest or Collateral

Answer 18

True

Question 19

(T/F): All deferred tax liabilities are reported as non-current

Answer 19

True