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ATKINS
PRINCIPLES OF
FINANCIAL ACCOUNTING
CANADIAN EDITION
Chapter 10
Current Liabilities
Prepared by:
Debbie Musil
Kwantlen Polytechnic University
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Current Liabilities
Determinable (certain) current
liabilities
Uncertain liabilities
Estimated liabilities
Contingencies
Determinable (Certain)
Current Liabilities
Obligations that are expected to
be settled:
Within one year of the balance
sheet date, or
Within normal operating cycle
Short-Term Notes
Payable
Short-Term Notes
Payable 2
Interest is recorded in the period the loan
is outstanding:
Current Maturities of
Long-Term Debt
The portion of long-term debt
that is due within the current
year
Amount not due within current
year is disclosed as a long-term
liability
Estimated Liabilities
Obligation exists but the
amount and timing is uncertain
We owe someone, but not sure
how much, when or even who
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Product Warranties
Promises made by seller to buyer to
repair or replace a product if it is
defective or does not perform as
intended
Warranties will lead to future costs
for replacement or repair of
defective units
Cost of warranty is estimated and
accrued based on prior experience
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Customer Loyalty
Programs
and
Gift
Cards
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Contingent Liabilities
(or Provisions)
Record liability if both conditions are
met:
It is likely (or probable (more likely than
not) under IFRS) that an obligation exists,
and
Amount can be reasonably estimated
If contingency is unlikely:
Still disclosed if event is substantial,
otherwise
not disclosed
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Financial Statement
Presentation
Current liabilities are the first category
reported in the liabilities section of the
balance sheet
Each type of current liability is listed
separately
Listed in order of liquidity, usually by
maturity date
Also common to show bank loans, notes
payable and accounts payable first regardless
of size
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