ACCO 320 CH 13 || All Questions Answered Correctly.

What are liabilities? correct answers A present obligation of the entity to transfer an economic resource as a result of past events Legal obligation correct answers 1. A contract through its explicit or implicit terms 2. legislation (ie. tax liability) 3. Other operation of law Constructive obligation correct answers 1.By an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities, and 2.As a result, the entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities Financial liability correct answers Any liability that is a contractual obligation Non-financial liabilities correct answers -usually not payable in cash -more difficult to measure than financial liabilities because the obligations will be met with goods and services and the timing of meeting the obligation and its amount aren't fixed line of credit correct answers the amount of actual credit used is reported on the SFP, and any restrictions that are imposed by the financial institution are disclosed in the notes Payroll deductions correct answers CPP/QPP, EI, Income taxes - deducted from employees' pay and paid to government. There's an employer portion to CPP/QPP & EI. Accumulated rights to employee benefits correct answers Vacations or other compensated leaves (sick days earned). Expensed in the period earned by employees since they are unconditional. Sick days that can be taken due to actual sickness requires an estimate Callable debt correct answers Debt that can be called at any time before maturity Considered current as it may have to be funded out of current assets Need to disclose planned repayment for users If a long-term debt agreement is violated and the liability becomes payable on demand (callable), the debt is classified as current Callable debt IFRS correct answers Always current, even if the lender agrees between the date of the SFP and the date the financial statements are released that it won't demand repayment because of the violation At the date of the SFP, the entity didn't have an unconditional right to defer the payment beyond 12 months from the reporting date That right could only be exercised by the lender Callable debt ASPE correct answers Reclassified as current liability unless: -The creditor waives in writing the covenant requirements, OR