FAR 13 - LIABILITIES Flashcards

1
Q

When is a loss contingency recognized?

A

A loss contingency is only recognized if it is both probable and estimable.

If it is only reasonably possible, it is disclosed but not accrued.

**Gain contingencies are NEVER recognized, regardless of probability

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2
Q

How do GAAP and IFRS differ in reclassifying current liabilities as noncurrent?

A

GAAP: requires only INTENT and ABLILITY to arrange for long-term refinancing

IFRS: required ACTUAL AGREEMENT for refinancing in place at the balance sheet date in order to report a current liability as concurrent

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3
Q

All deferred tax assets and liabilities are classified as what type on the balance sheet? (current or noncurrent)

A

All deferred tax assets and liabilities are classified as NONCURRENT on the balance sheet

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4
Q

What is the proper financial statement presentation for a reasonably possible loss contingency?

A

Disclose but do NOT accrue

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5
Q

what does “Withholdings due to the IRS” represent?

A

Withholdings due to the iRS represent taxes that are paid for by the employee (including all prior withholdings remitted)

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6
Q

Under IFRS, what is a contingency vs a provision?

A

Under IFRS, a provision is a liability that is uncertain as to timing or amount (similar to GAAP Contingency)

Under IFRS, a contingency are potential obligations that are not recognized because they aren’t estimable or they are not probable. Contingencies under IFRS are disclosed but not accrued.

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7
Q

when warranty repair costs are incurred, does it reduce warranty expense or warranty liability?

A

warranty liability

**warranty expense is calculated off sales

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8
Q

interest expense on self-contructed long-term assets may capitalized to the extent that ______.

A

to the extent that interest is actually paid

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9
Q

For a troubled debt restructuring involving only a modification of terms, what would be compared to the carrying amount of the debt to determine if the debtor should report a gain on restructuring?

A

the sum of the total FUTURE cash payments, is compared to the carrying amount of the debt in order to determine any gain on restructuring

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