1. Learning Objectives
After studying the material in this chapter you will be able to do the following:
LO1 Explain what liabilities are and how they are valued.
LO2 Describe the nature and type of current liabilities and how they are accounted for.
LO3 Recognize the characteristics of bonds, mortgages and other forms of long-term debt. Determine the value of bonds and understand how they are accounted for. Calculate mortgage payments and the amount of interest and principal paid each period.
LO4 Explain the fundamentals of leasing and how leases are accounted for and reported in the financial statements.
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Copyright © 2009 McGraw-Hill Ryerson Limited

2. What are Liabilities?
LO1
Obligations to provide cash, goods or services to parties an entity ‘owes something to’
Require sacrifice of resources to settle
Result from past transactions or events
Not negotiable
E.g., amounts owed to supplier for inventory
Copyright © 2013 McGraw-Hill Ryerson Limited
Copyright © 2009 McGraw-Hill Ryerson Limited

3. Valuation of Liabilities
LO1
Long-term — satisfied in more than one year
Discounted to their present value
Current liabilities — satisfied in one year
Recorded at face value
Copyright © 2013 McGraw-Hill Ryerson Limited
Copyright © 2009 McGraw-Hill Ryerson Limited