HIGHLIGHTS OF CHAPTER 13: Current Liabilities

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HIGHLIGHTS OF CHAPTER 13 Current Liabilities

• May 2004

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SIGNIFICANT ISSUES

• Characteristics of liabilities
• Types of current liabilities
• Contingencies

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CHARACTERISTICS OF LIABILITIES

• What you owe
• Obligation settled by transfer or use of cash,
  goods or services
• Unavoidable obligation
• Economic event that created obligation already
  occurred

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TYPES OF CURRENT LIABILITIES

• Accounts payable accrued liabilities
• Notes payable
• Current maturities of long-term debt
• Short-term obligations to be refinanced
• Dividends payable

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TYPES OF CURRENT LIABILITIES

• Returnable deposits
• Unearned revenues
• Sales tax payable
• Property taxes payable
• Income taxes payable

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CONTINGENCIES

• Gain contingencies
• Loss contingencies

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PROBABILITIES

• Remote
• Reasonably possible
• Probable

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DISCLOSURES

• Remote - Not disclosed
• Reasonably possible
• Disclose in notes
• Probable
• If measurable, record and disclose
• If not measurable, disclose

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SIGNIFICANT SUBSEQUENT EVENTS

• Confirming events
• Discretely related to subsequent period

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LOSS CONTINGENCIES

• Litigation, claims assessments
• Asserted claims
• Unasserted claims
• Guarantee warranty costs
• Expense (product) warranty
• Sales warranty contract

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LOSS CONTINGENCIES

• Premiums coupons
• Environmental liabilities
• Self-insurance

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FINANCIAL ANALYSIS

• Current ratio
• Quick ratio

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EMPLOYEE-RELATED LIABILITIES

• Payroll deductions
• Compensated absences
• Postemployment benefits
• Postretirement benefits
• Bonuses