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Kultur Dokumente
LIABILITIES
QUESTION 1-1
Define liabilities.
ANSWER 1-1
Liabilities are present obligations of an entity arising from past
transactions or events, the settlement of which is expected to
result in an outflow from the entity of resources embodying
economic benefits.
QUESTION 1-2
What are the essential characteristics of an accounting
Iiability?
ANSWER
1-2
of a particular entity.
b.
it
is
of
,l
QUESTTON
1-3
c.
d.
e.
f.
g.
h.
services
Amounts withheld from ernployees or other parties for taxes
and for contributions to the Social Security System or to
pension funds
Accruals for wages, interest, royalties, taxes, product
w'arranties and profit sharing plans
Dividends (not stock dividends) declared but not paid
Deposits and advances from customers, officers and
shareholders
Debt obligations for borrorved funds - notes, mortgages and
bonds payable
Incorne tax payable
Unearned revenue
QUESTTON 1-4
Explain the "initial measurement" of liabilities.
ANSWER 1-4
PFRS 9, paragraph 5.1.1, provides that an entity shall
measure initiolly a financial liability at its fair value minus,
in the case of financial liability not designoted at fair uolue
th,rou,gh profit or loss, transaction costs that are directly
attributable to the issue of the financial 1iability.
I
However, the transaction costs are expensed imrnediately
if the financial liability is designated initiol'ly o,s at fair ualue
through profit or loss.
a.
b.
c.
a.
b.
c.
QUESTTON 1-5
what is the meaning of "fair value" of a financial liability?
ANSWER
1-5
QUESTTON 1-6
Explain the "subsequent measurement" of liabilities.
-L\SWEB r4
PFRS.9, paragraph ?.8-,1, provides that after initial
rccognition, an entity
shall measure a
a- At
ri".""iui-ri"tiliiy:---
b. At fair
QUESTTON 1-7
liability?
cost" of a financial
ANSWER r-7
The "amortized cost" of a financial Iiability is the
amount at
which the financiar riability i. *"r""."a
i;iti;i
il*"grritio,
minus.principal repaymerr!, plus or minus
"; the cumulative
amortization using the effective inter,e"t *u-trroa^^"r
difference between t[e initial amount and ih; ;;;;;-rmount.
""y
ANSWER r-8
Noncurrent liabilitie.s, for exarnple, bond payable
and
noninterest' bearing
payabfi, ;e inrtiariy -m!uJ"""a rt
rote
present value and subsequentty measured.;i
ilil;fcost.
"q"J;;thu
;;;;;;;i""
"r-tr* ""i"
p"vru".
QUESTTON l-e
Explain the measurement of atrrent liabilities.
ANSWER 1-9
Conceptually, alT liabilities are initially measured at present
value and subsequently measured at amortized cost'
QUESTTON 1-10
initial recognition
QUESTTON 1-11
What are "estimated liabilities"?
ANS\IER 1-1r
Estintated liobi.lities are obligations which exist at the end
of reporting period although their arnou,t is not definite.
In many
QUESTION 1-12
Explain an estimated premium iiability.
ANSWER 1-12
Premiunts are articles of value such as toys, dishes, silven'are,
and other goods and in some cases cash payments, given to
customers as result of past sales or sales promotion activities.
QUESTTON 1-13
What is a customer loyaltY Program?
ANSWER 1-13
Many entities use a customer }oyalty program to build brand
loyalty, retain their valuable customers and of course,
increase sales volume.
If a customer
QUESTION 1-14
Explain the recognition and measurement of the "points"
awarded under a customer loyalty program.
ANSWER 1-14
Under IFRIC 13, an entity shall account for the arvard
credits as a "separate component of the initial sale
transaction".
If the entity
ANSWER 1-16
as principal in
the transaction, the amount of revenue is equal to the gross
consideration ailocated to the award credits.
as agent of the
net arnount
to
the
third party, the amount of revenue is equal
retained on its own account.
QUESTION 1-17
Explain an estimated warranty liability.
ANSWER 1-17
Home appliances like television sets, stereo sets, ratio sets,
refrigerators and the Iike are often sold under guarantee or
warranty to provide free repair service or replacement
during a specified period if the products are defective.
Such entity policy may involve significant costs on the part
of the entity if the products sold prove to be defective in the
future within the specified period of time.
QUESTION 1-18
Explain "payroll taxes payable".
ANSWER 1-18
Under our law, the entity as an empioyer is required to
withhold from the salaries of each ernployee the following:
c.
d.
Security System
or SSS
Employee's contribution for Phithealth
Employee's contribution to the Pag-ibig Fund
QUESTION 1-19
Explain "value added taxes payable".
ANSWER 1-19
QUESTION L-20
Explain "gift certificates payable".
ANSWER 1-20
Many megamalls, department stores and supermarkets sell
gift certificates which are redeemable in merchandise'
When the gift certificates are sold, the amount received is
initially recognized as unearned revenue or specifically "gift
certificates paYable".
QUESTION 1-21
What are "refundable dePosits"?
ANSWER 1-21
Refund.able d,eposits consist of cash or property received from
".rrto*"rt
certain conditions.
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lr
t1
QUESTTON 1-22
ANSWER 1-22
1.
2.
3.
4.
QUESTTON 1-23
Explain a "deferred revenue".
ANSWER 1-23
Deferred revenue or unearned revenue is income alreadv
received but not yet earned
Deferred revenue may be realizable within one year or in
rnore than one year frorn the end of reporting period.
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one year,
it
is
unearned
Typical examples of current d'eferred reL'eruLLe are
interest income, unearned' rental income and unearned
subscriPtion revenue'
one year,
are
Typical examples of non'cut'ren't del'erred reuenue and
unearned' revenue from long-term service contracts
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