Chapter 12 - Accounting for liabilities. After completing this chapter you should be able to: Describe the nature, type, and valuation of current liabilities, explain the classification issues of short-term debt expected to be refinanced, identify types of employee-related liabilities, identify the criteria used to account for and disclose gain and loss contingencies. | CHAPTER 12 ACCOUNTING FOR LIABILITIES INTERMEDIATE ACCOUNTING Principles and Analysis 2nd Edition Warfield Wyegandt Kieso Describe the nature, type, and valuation of current liabilities. Identify various types of bond issues. Describe the accounting valuation for bonds at date of issuance. Describe the accounting procedures for the extinguishment of debt. Identify the criteria used to account for and disclose gain and loss contingencies. Explain the accounting for different types of loss contingencies. Explain the reporting of off–balance-sheet financing arrangements. Indicate how to present and analyze liabilities and contingencies. Learning Objectives 1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets (a company’s know-how, market dominance, marketing setup, well-trained employees, and brand image). Timeliness (no real time financial information) Accounting for Liabilities Current Liabilities Long-Term Debt Special Issues What is a liability? What is a current liability? Issuing bonds Types of bonds Valuation of bonds Contingencies Off–balance-sheet financing Presentation and analysis Service Cost - Actuaries compute service cost as the present value of the new benefits earned by employees during the year. Future salary levels considered in calculation. Interest on Liability - Interest accrues each year on the PBO just as it does on any discounted debt. Actual Return on Plan Assets - Increase in pension funds from interest, dividends, and realized and unrealized changes in the fair market value of the plan assets. Amortization of Unrecognized Prior Service Cost - The cost of providing retroactive benefits is allocated to pension expense in the future, specifically to the remaining . | CHAPTER 12 ACCOUNTING FOR LIABILITIES INTERMEDIATE ACCOUNTING Principles and Analysis 2nd Edition Warfield Wyegandt Kieso Describe the nature, type, and valuation of current liabilities. Identify various types of bond issues. Describe the accounting valuation for bonds at date of issuance. Describe the accounting procedures for the extinguishment of debt. Identify the criteria used to account for and disclose gain and loss contingencies. Explain the accounting for different types of loss contingencies. Explain the reporting of off–balance-sheet financing arrangements. Indicate how to present and analyze liabilities and contingencies. Learning Objectives 1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets .
