...CHAPTER 13 Current Liabilities and Contingencies ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics 1. Concept of liabilities; definition and classification of current liabilities. Accounts and notes payable; dividends payable. Short-term obligations expected to be refinanced. Deposits and advance payments. Compensated absences. Collections for third parties. Contingent liabilities (General). Guaranties and warranties. Premiums and awards offered to customers. Self-insurance, litigation, claims, and assessments, asset retirement obligations. Presentation and analysis. Questions 1, 2, 3, 4, 6, 8 7, 11 9, 10 12, 5 13, 14, 15 16 17, 18, 19, 20, 22 21, 23 24, 25 26, 27, 28 1, 2, 3 4 5 8, 9 6, 7 10, 11 13, 14 15 12 5, 6, 16 7, 8, 9, 16 13, 16 10, 11, 16 12, 15, 16 14 3, 4 10, 11, 13 5, 6, 7, 12, 14 8, 9, 12, 14 2, 10, 11, 13 9 6, 7 5, 6, 7 7, 8 Brief Exercises Exercises 1, 16 Problems 1, 2 Concepts for Analysis 1 2. 3. 4. 5. 6. 7. 8. 9. 10. 2, 16 3, 4 1, 2 1, 2 3, 4 2 11. 29, 30, 31 17, 18, 19 3 Copyright © 2010 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 13/e, Solutions Manual (For Instructor Use Only) 13-1 ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE) Learning Objectives 1. 2. 3. 4. 5. Describe the nature, type, and valuation of current liabilities. Explain the classification issues of short-term debt expected to be refinanced. Identify types of employee-related liabilities. Identify the criteria used to account for...
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...ACC230 Lucent Technologies 2. Evaluate the asset, debt, and equity structure of Lucent technologies, as well as trends and changes found on the common size balance sheet. Assets are current assets plus long-term assets, current assets were about 49.42% and fixed assets equal about 10%.Which has been mostly financed by long-term liabilities of 96% and short-term liabilities of 31%, this equals to 127% financing do to negative equity on previous year losses. In 2004 assets decreased to at about 48.52%, the company sold some of the fixed assets equaling about 13.5%. There was also an increase in inventory from 4% in 2003 to 4.8% in 2004. There was an increase in long-term liability of about 9% but there was also a decrease in short-term liability of about 9.5% which helps offsets the increase in the long-term liabilities. There was improvement in equity of about 9% for the year. 3. What concerns would investors and creditors have based on only this information? According to the balance sheet the company is not financially sound with mostly long-term financing 82% and short-term of about 26% a total of about 108% this is still high, Lucent inventory has also increased this is also something that needs to be kept in mind if the demand for the product starts to decline and there’s to much inventory that’s not moving what will be the carrying cost and can the company with stand those costs, and as an investor or creditor I am sure they definitely don’t want...
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...Liabilities The role of a liability and what it means to the business as a whole is different for every business. What remains the same is the definition. A liability is a company’s legal debts or obligations that arise during the course of business operations and is recorded on the balance sheet. Liabilities can include many things to a business, such as, loans, accounts payable, mortgages, accrued expenses, etc. All the named liability accounts are just fancy for any money or service that is owed to another party. There are two types of liabilities, current liability and long term liability. Current liability is debt payable within one year and long-term liability is debt payable over more than a year. Current liability includes payables such as wages, accounts, taxes, and accounts payable. Long term liability includes long term bonds, notes payables, and long term leases. It is important that every business knows the concept of extinguishing liabilities. To extinguish liabilities means to satisfy the obligation and or payment to the creditor. Another way to extinguish liabilities is to transfer assets. This idea of extinguishing liabilities is meant for use by the SEC. There are many different industries that consider industry guidance in the FASB, Financial Accounting Standards Board, Codification and they include agriculture, contractors, entertainment, financial services and health care entities. The agriculture industry has many different characteristics represented...
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...capital leases. This paper should satisfy any questions about these topics. Long-Term Liabilities Included are several types of long-term liabilities; bonds payable, notes payable, and capital leases. Each of these types of debts have some similarities and some differences regarding the reporting and disclosure requirements, so to better understand those requirements and ensure proper application of requirements, an explanation is given. Loan covenants or restrictions usually come with long-term debt to protect both lenders and borrowers (Kieso, Weygandt, and Warfield, 2007). The information included in the loan covenant is the amount authorized to be issued, interest rate, due dates, call provisions, property pledged as security, sinking fund requirements, working capital, or any other restrictions. All of this information should be included in the body of the financial statements or the notes for a complete understanding of the financial position of the company (Kieso, et al., 2007). Bonds Payable Companies should report long-term bond liabilities at their amortized value. If a bond issues at a premium, the total bond liability reported at the end of the reporting period shall be the total par value of the bond and the premium received less the issuance costs. If the bond issues at a discount, the reported amount would be the total par value less the unamortized discount. Notes Payable Long-term notes payable have a maturity date and either stated or implicit interest...
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...Case 13-08 overview M international (M) and W Inc (W) decided to enter a long term litigation, due to a patent rights violation. M being the demandant and W the respondent. Not enough information was provided in relation to the charges or the patent. To properly understand the events a chronological descripcion of the litigation is to be provided. Events: Problems to be addressed Is necessary to understand the proper and logical accounting literature to address the matter previously presented. The case it self provides a series of matters to be attends, these matters have to be address in accordance to the General Accepted Accounting Principles. Matters to be discussed: * The liability to be recorded by M financial statements, for the year-end December 31, 2007 * What adjustments should be done if any, for the year-ended December 31, 2009, financial statements; should the amount be recognized as a 2009 event or as a prior period adjustment. * When should M record a deduction of the previously recorded loss contingency Solution To understand the topic to be discussed is necessary to understand its basic components. FASB recognizes that companies are often involved in situations where uncertainty exists about whether an obligation will arise and an amount will be disbursed to fulfill or settle the obligation. This is known as a Contingency in the Accounting world. What is a contingency? ASC 450-10-20 defines it as “An existing condition...
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...Monessa Catuncan Module 3 SLP FIN501- Strategic Corporate Finance Dr. William Anderson 26 March 2012 Introduction Debt Ratio and Debt to Equity Ratio Calculations for Apple Inc. Total Liabilities (L) = 39.756B Total Equity (E) = 76.615B Short-term Liabilities (SL) = 0 Long-term Liabilities (LL) = 0 (finance.google.com) Debt Ratio =LL+E= 39.75639.756+76.615= 39.756116.371=0.342 Debt to Equity Ratio =LE= 39.75676.615=0.519 Short-term Debt Ratio =SLL+E= 039.756+76.615= 0116.371=0 Short-term Debt to Equity Ratio =SLE= 076.615=0 Long-term Debt Ratio =LLL+E= 039.756+76.615= 0116.371=0 Long-term Debt to Equity Ratio =LLE= 076.615=0 Analysis of Apple Inc. Ratios and Debt Throughout the past decade, Apple’s tremendous success has allowed the company to achieve record-breaking values in total revenue, market capitalization, and cash flows, among many other values. While the calculations above show a debt to equity ratio of almost 0.6, Apple Inc. has not endured debt since 1999; therefore this value can be a slightly misleading. The total liabilities number above represents a wide variety of items such as payrolls, inventory purchases, taxes, etc. If Apple’s debt value were used as the total liability value, this ratio would be zero. The short- and long-term debt to equity ratios also equate to zero. While Apple currently enjoys a debt-free environment, the company has not always seen prosperous times. In 1996, Apple allocated close to one billion...
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...the concept of liabilities of financial accounting. The definition of liabilities, current liabilities, and long-term liabilities are covered. The assigned readings clarify the difference among accounts payable, notes payable, accrued expenses, depreciation, and amortization procedures. This week, you gain insight into the methods used for presentation and analysis of long-term liabilities and how those journal entries are calculated and recorded. During Week Two, you also prepare the necessary calculations and journal entries for depreciation and amortization. Liabilities OBJECTIVE: Differentiate among accounts payable, notes payable, and accrued expenses. Resource: Ch. 10 of Financial Accounting Content • Ch. 10: “Liabilities” o Current Liabilities • What is a Current Liability? • Statement Presentation and Analysis o Long-Term Liabilities • Bond Basics • Accounting for Bond Issues • Accounting for Bond Retirements • Accounting for Long-Term Notes Payable • Statement Presentation and Analysis OBJECTIVE: Prepare necessary journal entries to record the issuance of bonds, the periodic interest, and amortization of bond premiums and discounts. Resource: Ch. 10 of Financial Accounting Content • Ch. 10: “Liabilities” o Current Liabilities • What is a Current Liability? • Statement Presentation and Analysis o Long-Term Liabilities • Bond...
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...ASSETS & LIABILITIES Asset is an item of value owned by the company. Assets can be tangible i.e. those which have some physical existence or can be intangible i.e. which do not exist in physical form but can be held in the form of contracts or rights. Assets are usually grouped in order of liquidity (ease of conversion to cash) on the balance sheet. Cash is therefore the most liquid of all assets. Assets can be classified as: 1.) Current Assets – Those assets that are expected to be converted to cash in 12 months or less. This can be in the form of cash, accounts receivables, inventory for producing goods etc. 2.) Investments – These are the investments which the company make in other companies in the form of equity purchase, bonds etc. 3.) Fixed Assets – A fixed asset is one that is held for the purpose of producing or supplying goods or services and not for sale in the normal course of business. They are also referred to as long lived/ long term assets and are sub-classified as following: a. Property, Plant & Equipment – These are tangible items having physical existence and can be seen and felt. b. Intangible Assets – They have no physical existence and rather represent legal rights with associated economic benefits. c. Natural Resources – These include oil, natural gas, minerals and forests. Liability is something which a company owns to people or businesses other than its owners. Liability is a present obligation arising due to...
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...1. Georgia Lazenby believes a current liability is a debt that can be expected to be paid in one year. Is Georgia correct? Explain. Yes, I believe that Goergia Lazeby is correct, because it is a debt making it a liability that needs to be paid within a year. 7. (A) what are long-term liabilities? Give two examples. (b) What is a bond? A long-term liability is something like a bond or long term notes that should be paid with in one year. A bond is something issues by the government or corporation that is and interest bearing note. 8. Contrast these types of bonds: (a) Secured and unsecured. Secured bonds are backed by collateral unsecured bonds are based on trust of re-payment. (b) Convertible and callable Callable bonds mean you can take funds before the maturity date of the bond. Convertible bonds are mixture debt that can be used for stock. And can’t be used until maturity date. 19. Valentine Zukovsky says that liquidity and solvency is the same thing. Is he correct? If not, how do they differ? No they are not the same thing. Liquidity means you have a year to pay with solvency you can pay when ever. BE10-1 Kananga Company has these obligations at December 31: A note payable for $100,000 due in 2 years. That would be long term Liability. A 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments. This is liquidity for the 20,00 due in a year. Interest payable of $15,000 on the mortgage. Current asset Accounts payable...
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...some of the fixed assets equaling about 13.5%. There was also an increase in inventory from 4% in 2003 to 4.8% in 2004. There was an increase in long-term liability of about 9% but there was also a decrease in short-term liability of about 9.5% which helps offsets the increase in the long-term liabilities. There was improvement in equity of about 9% for the year. 3. What concerns would investors and creditors have based on only this information? According to the balance sheet the company is not financially sound with mostly long-term financing 82% and short-term of about 26% a total of about 108% this is still high, Lucent inventory has also increased this is also something that needs to be kept in mind if the demand for the product starts to decline and there’s to much inventory that’s not moving what will be the carrying cost and can the company with stand those costs, and as an investor or creditor I am sure they definitely don’t want to see negative equity. As stated there was profit gain of $2002 in 2004 showing the company can improve and its financial planning seems to be on the right patch and I am sure they will continue to improve. As a creditor the company shows 48.5% in total current assets which is good in case the firm needs to liquefy more assets when needed as it did previously, and 26% in total current liabilities showing a decrease. Overall this shows the company still has enough...
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...Assignment 2: INDIVIDUAL You are required to choose a company listed on Bursa Malaysia. It is important that you have access to the last two years (2012 & 2013). 1. Based on the company you have selected, write a brief introduction on the business including historical background, nature of business, financial performance and the industry in general. 2. Based on the latest financial statements of the company identify and explain the amount of financing sources the company have from the short term, intermediate and long term financing. Compare each of the financing sources to the company’s total amount of financing. 3. Based on your answers in Part 2 and the company’s financing requirements, identify and explain the company’s main source of financing. Evaluate the importance of the financing source and the effects on the company’s capital structure. Answer: PROFILE The history of the PROTASCO BHD can be traced back to the early 1990s when its founders, Dato’ Hasnur Rabiain bin Ismail and Dato’ Chong Ket Pen started in the road construction business by setting up of HCM in 1991. In the start-up years, HCM was involved in sub-contracting works for clients like PROPEL and JKR. In 1994, the Group achieved a significant milestone when it was awarded a major road construction contract from PROPEL for RM 7.5 million for the pavement construction of the EastWest Link Expressway (Package 5) in Kuala Lumpur. Over the past 10 years, the Group has gradually built up an...
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...INTERMEDIATE ACCOUNTING II SYLLABUS - Fall 2014 Instructor: Dr. N.J. Kim, CPA Office: ST 612 Office Hours: TR 8:35 – 9:40 am & R 4:00 – 6:00 pm Phone: (323) 343-2840 Email: nkim2@calstatela.edu Instructional Web site: http://instructional1.calstatela.edu/nkim2/ Connect URL: http://connect.mcgraw-hill.com/class/sec-3 Textbook: Intermediate Accounting, 7th Edition, Spiceland, Sepe and Nelson, McGraw-Hill, ISBN-9780078025327 (Hard copy, Volume II, or e-book with CONNECT available) Course Objectives and Description: Intermediate Accounting is designed to acquaint the student with current accounting theories and practices. In this second part of intermediate accounting, we will learn accounting for fixed assets, intangibles, long-term liabilities, investments, and stockholders’ equity. Statement of cash flows and accounting issues related with accounting changes and error correction are also covered in this class. Prerequisite: ACCT 320A or equivalent with a grade C or better Grading: Points are distributed as follows. Accounting majors must earn a grade of “C” or better in each accounting class taken to graduate. Midterms 100 250-300 A Final 130 210-249 B Participation & Attendance 10 180-209 C Comprehensive test 20 150-179 D Homework 40 Below 150 F Total 300 points A modified curve may be applied at the end of the quarter if necessary. Withdrawal Policy: The dropping policies...
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...correlate that with the mind. Let me give you one example of something that is taught in class. Memory is an active system that receives, stores, and recovers information. In order for one to keep a memory for a longer length of time, the memory must pass through the sensory memory, short-term memory, and into the long-term memory. The sensory memory is only able to hold an exact copy of what you may see or hear but only for a couple of seconds. The information stored from a visual memory is called the iconic memory while information stored from hearing is called the echoic memory. However there is a lot of information when you see and hear things. Therefore we have something called selective attention that blocks out what we deem unimportant. An example would be when being in a concert the only thing you may remember is the band; however it would be fairly difficult if you were to try to remember the faces of everyone in the audience. Through selective attention we can filter out what we see and hear into the short-term memory. Short term memory is able to store a small amount of information. However if we do not utilize or rehearse the information, then it becomes lost forever. Example of a short-term memory may be a number to a telephone or a list...
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...Learning and Memory Humans are continually learning, storing and coding raw information that is sent to us from our sensory registers from the outside world. Because of such an overload of stimuli thrown at us, it is vital and necessary to learn as infants and throughout our lives how to store and process this information. We learn to pay attention to some material, while other data is filtered out immediately. Researchers have spent enormous amounts of time studying the different types of memory: short-term memory, long-term memory, procedural memory and declarative memory. Because the only way we survive, evolve and learn new skills and talents is by developing our minds and adapting to the ever changing demands of life. What scientists have discovered is that learning requires attention, coding and storing of past memories and experiences. In order to live healthy and happy lives, we can stimulate and encourage learning throughout our entire lifetime from infancy to late adulthood providing that our brain is biologically healthy and intact. Most important, scientists are now studying what simple changes can be made to stave off such diseases such as Dementia and Alzheimer’s. The only kind of memory that the world has ever been able to agree on is that one which saves occurrences from the past. Even more limiting is a methodical notion in which the procedure that creates memory (learning) is identified by the modification of the actions of an individual who...
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...brain works in regard to how it receives, processes and stores information during various stages of development (Zastrow & Kirst-Ashman, 2009, p.111). These theories have been directed by research conducted on various branches of psychology. Of particular interest is cognitive psychology, which can be defined as a branch of psychology that studies mental processes that facilitate learning, remembering, thinking and perception among other processes (Brown, 2006, p. 6). Previous studies on the different types of memories indicate that various parts of the brains have the ability to store different memories. This is further supported by a number of cognitive theories that discuss the presence of short term memory stores, which temporarily holds information before it is processed into long term memories. Despite the...
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