1. Chapt. 11 Current Liabilites1 CURRENT LIABILITIES p.514 Chapter 11 Do Practice p. 542 BE11-1 through BE11-9 p.545 E11-8, E11-10 p. 547 P11-1A, P11-2A p.555 BYP11-2,3,5 1.Debt that is to be ___________________ (or within one operating cycle) 2.Debt will be paid with ____________assets  A current liability must meet both of the above criteria

2. Chapt. 11 Current Liabilites2 CURRENT LIABILITIES p.515+ Refer to an AR… how many current liabilities are listed? 1. 2. 3. 4. 5. 6.

3. Chapt. 11 Current Liabilites3 CURRENT LIABILITIES – EXAMPLES Accrued interest at March 31 for Q1, for a $100,000, 9.5% 6 month note payable issued Jan 31. Air France sold Schoeny a package holiday to the July Tour de France in January for $5500 The Sales for Q2 for West49 were $42,000,000. Journalize the remittance of GST (5%) owing at the end of the Quarter July 31

4. Chapt. 11 Current Liabilites4 ESTIMATED LIABILITIES P. 522 “An obligation that exists, but whose ___________ ___________________. However, the uncertainty is not so great that the company cannot ___________________ the liability” EXAMPLES:

5. Chapt. 11 Current Liabilites5 Warranty Expense = Estimated Liability  ABC Co. estimates that 5% of its products will be defective. Journalize the warranty estimate for a $1,000,000 sale on May 8 th. When warranty repair costs actually occur… $15,000 warranty cost, Sept 23

6. Chapt. 11 Current Liabilites6 CONTINGENT LIABILITIES P. 525 Refer to an AR… notes for contingent liabilities What does “contingent” mean?  Events that are dependant on something and that may or may not happen; outcome is not yet know. a loss or ________________ stemming from past events; the possibility and the value of the potential loss is___________. greater degree of uncertainty than an estimated liability disclosed in ________ to FS

7. Chapt. 11 Current Liabilites7 CONTINGENT LIABILITIES P. 525 Refer to an AR… notes for contingent liabilities Record Contingent Liabilities when: 1. 2.  as an investor be ______ of contingencies…  Dow Corning and silicon breast implants bankrupted the company and was first disclosed in the notes

8. Chapt. 11 Current Liabilites8 Commitments – off Balance Sheet Obligations Refer to an AR… notes for obligations ____________, but should be _______ in the AR if ________ examples: derivative contracts “hedging” with futures; lease obligations; contracts for future transactions