双语中会(第八章).ppt

1、Current Liabilities and Contingencies,8,韩 梅 芳,Content,Current liability Advance Collections Contingencies,Characteristics of Liabilities,Result from past transactions or events.,Arise from present obligations to other entities.,Probable future sacrifices of economic benefits.,过去的事项，引起现实的义务，造成未来的经济利益

2、流出,What is a Current Liability?,LIABILITIES,Long-term Liabilities,Current Liabilities,Obligations payable within one year.,Current Liabilities,Open Accounts and Notes,Accounts Payable Obligations to suppliers for goods purchased on open account. Short-term Notes Payable 短期应付票据 Cash borrowed from the

3、 bank and recognized by a promissory note. Note payable within one year. Including: Trade Notes Payable 应付商业票据 Similar to accounts payable, is formally recognized by a written promissory note. Short-term loan notes payable 应付短期贷款票据,Credit lines,Credit lines 信用额度 Prearranged agreements with a bank th

4、at allow a company to borrow cash without following normal loan procedures and paperwork. A committed line of credit 承诺的信用额度 is a more formal agreement that usually requires the firm to pay a commitment fee to the bank.,Credit lines,For example, first national bank give Matrix inc. to 1,000,000 comm

5、itted credit line for each year. During 2010, Matrix inc. borrowed the money 600,000 for eight months. Annual commitment fee rate is 5%. What amount will Matrix record the commitment fee ? 400,000*5%+600,000*5%*4/12=30,000,Interest,Interest on notes is calculated as follows:,Amount borrowed,Interest

6、 rate is always stated as an annual rate.,Interest owed is adjusted for the portion of the year that the face amount is outstanding.,Interest-bearing Notes,On September 1, Eagle Boats borrows $80,000 from Cooke Bank. The note is due in 6 months and has a stated interest rate of 9%. Record the journa

7、l entry.,September 1: Cash . 80,000 Notes payable . 80,000 To record short-term note payable to Cooke Bank.,How much interest is owed to Cooke Bank at year-end, on December 31?,$80,000 9% 4/12 = $2,400,Interest-bearing Notes,Assume Eagle Boats year-end is December 31. Record the necessary adjustment

8、 at year-end.,December 31: Interest expense . 2,400Interest payable . 2,400 To accrue interest on note due to Cooke Bank.,Record the journal entry for the loan repayment when the note matures on February 28.,February 28: Interest payable . 2,400 Interest expense . 1,200 Note payable .80,000 Cash 83,

9、600 To pay off note and interest.,Noninterest-bearing Notes,Notes without a stated interest rate carry an implicit, or effective rate. The face of the note includes the amount borrowed and the interest.,Commercial Paper 商业票据,由金融公司或某些信用较高的企业开出的无担保短期票据. 期限在9个月以下.,Issued directly to the lender and is b

10、acked by a line of credit with a bank.,Recorded in thesame manner as notes payable.,Salaries, Commissions, and Bonuses,Compensation expenses such as salaries, commissions, and bonuses are liabilities at the balance sheet date if earned but unpaid.,accrued wages payable accrued interest payable accru

11、ed income payable,adjusting entries,ABC Company is a retailer of equipment. Consider the following adjustments on January 31: Wages earned by employees during January but not paid as of January 31 were $3,750. Dr. wages expense 3,750 Cr. Accrued wages payable 3,750 The company borrowed $100,000 from

12、 the bank on January 1. The principal and 9% interest are to be paid 1 year later. Make the adjusting entry about the interest for January. Dr. Interest expense 750 Cr. Accrued interest payable 750,adjusting entries,On January 1, a corporation paid $3,000 cash to ABC Company as an advance rental for

13、 3 months. On January 31, an adjustment is needed to recognize the rent revenue earned for January. Dr. Unearned rent revenue 1000 Cr. Rent revenue 1000,adjusting entries,Income tax expense must be accrued on January income at a rate of 25% of income before taxes. the “pretax income” is 22,400 Incom

14、e tax=22,40025%=5,600 Dr. Income tax expense 5,600 Cr. Accrued income tax payable 5,600,Liabilities from Advance Collections,Advances from customers 预收账款 Refundable deposits 保证金 Gift cards 礼券(卡) Collections for third parties 第三方代收,Advances from customers,Matrix Publications collects magazine subscri

15、ptions from customers at the time subscriptions are sold. Matrix collected advance $20 million during 2011. On December 31, the average subscription was one-fourth expired.,( in millions) When Advance Is Collected When Product Is Delivered,( in millions) When Advance Is Collected Cash 20 Unearned su

16、bscriptions revenue 20 When Product Is Delivered Unearned subscriptions revenue 5 Subscriptions revenue 5,Refundable deposits,Matrix Inc. sells bottles of milk. Customers are charged a deposit for each bottle and receive a refund when the bottle is returned. During the year, deposits collected were

17、$30,000. 90% of the bottle were returned. Deposits are twice the cost of bottle. The inventory of bottle remains on the companys books until deposits are forfeited.,When deposits are collected When bottles are returned When deposits are forfeited,When deposits are collected Cash 30,000 Liability-ref

18、undable deposits 30,000 When bottles are returned Liability-refundable deposits 27,000 Cash 27,000 When deposits are forfeited Liability-refundable deposits 3,000 Revenues 3,000 Cost of goods sold 1,500 Inventory 1,500,Gift Cards,During December, 2010, Christmas promotion, MegloMart sold 20,000 gift

19、 cards at $25 each. All gift card sales were for cash. On December 31, 2010, only 1,000 gift cards had been redeemed. Unused gift cards expire on December 31, 2011.,December 31, 2010: Cash (20,000 $25) . 500,000 Unearned revenue .500,000 To record cash received from gift card sales.,Prepare the jour

20、nal entries on December 31, 2010 to record the December 2010 sale and redemption of gift cards.,December 31, 2010: Unearned revenue (1,000 $25) . 25,000 Sales revenue . 25,000 To record revenue from gift card redemptions.,Gift Cards,On December 31, 2011, 18,500 additional gift cards had been redeeme

21、d.,On December 31, 2011, the 500 remaining cards had not been redeemed.,December 31, 2011: Unearned revenue (18,500 $25) . 462,500 Sales revenue (18,500 $25) . 462,500 To record revenue from gift card redemptions.,December 31, 2011: Unearned revenue (500 $25) .12,500 non-operation revenue . 12,500 T

22、o record revenue from gift card expirations.,Collections for third parties,Dr. accrued wages payable 84,000 Cr. cash 70,500 other payable 13,500,A Closer Look at the Current andNoncurrent Classification,Current maturities of long-term obligations usually are reclassified and reported as current liab

23、ilities if they are payable within one year.,Short-Term Obligations Expected to be Refinanced 短期债务再融资,A company may reclassify a short-term liability as long-term if two conditions are met:,It has the intent to refinance on a long-term basis.,It has demonstrated the ability to refinance.,and,Example

24、,P 341,The following selected transactions relate to liabilities of Matrix Inc. Prepare the journal entries for these transactions. 2011 July 1, Arranged an line of credit with First City Bank amounting to $25,000,000 at the banks prime rate 11.5%. No commitment fees! No entry The existence of credi

25、t line would be described in a disclosure note.,Aug. 9, Received a $30,000 refundable deposit from a major customer. Cash 30,000 Liability-refundable deposits 30,000,Oct. 7, Received most of the bottles by the refundable deposit and a letter stating that the customer gave up $2,000 of the deposit. T

26、he cost of the bottles was $1,500. Liability-refundable deposits 30,000 Cash 28,000 Revenue 2,000 Cost of goods sold 1,500 Inventory 1,500,Nov. 1, Borrowed $7 million cash from First City Bank under the line of credit arranged in July and issued a nine-month promissory note. Interest at the prime ra

27、te of 12% was payable at maturity. Cash 7,000,000 short-term loan 7,000,000 December 31 Interest expense ($7,000,000*12%*2/12 ) 140,000 Interest payable 140,000,2012 Feb. 12, Using the unused portion of the credit line as support, issued $9 million of commercial paper. six-month, discount rate was 1

28、0%. Cash ($9,000,000 - $9,000,000*10%*6/12) 8,550,000 Discount on notes payable 450,000 Note payable 9,000,000,Aug. 1, Paid the 12% interest at maturity. 12, Paid the commercial paper at maturity. Interest expense ($7,000,000*12%*7/12) 490,000 Interest payable 140,000 Short-term loan 7,000,000 Cash

29、7,630,000 Interest expense($9,000,000*10%*6/12 ) 450,000 Discount on notes payable 450,000 Note payable (face amount) 9,000,000 Cash 9,000,000,Exercise,Contingencies 或有事项,Loss Contingencies 或有负债,A loss contingency is an existing uncertain situation involving potential loss dependingon whether some f

30、uture event occurs.,event will not occur probably. 不是很可能发生 the loss amount can not bereasonably estimated. 无法可靠计量,Loss Contingencies 或有负债,Three factors affect whether a loss contingency must be accrued and reported as a liability:,The entity has a present obligation as a result of a past event; It i

31、s probable that an outflow of resources; 很可能发生 whether the loss amount can bereasonably estimated. 可靠计量 called “estimated liabilities” 预计负债,Likelihood of occurrence: Probable 很可能 (50%, 95% Reasonably Possible 可能 (5%, 50% Remote 极小可能 (0, 5%,Loss Contingencies,Loss Contingencies,A loss contingency is

32、accrued only if a loss is probable and the amount can reasonably be estimated.,estimated liabilities,Product Warranties 产品质量保证 Extended Warranty Contracts 延长保修期 Premiums 赠品 Debt Guarantee 债务担保 Litigation Claims 诉讼索赔 Loss Contract 亏损合同,Product Warranties 产品质量保证,Product warranties inevitably entail co

33、sts. The amount of those costs can be reasonably estimated using commonly available estimation techniques. The estimate requires the following entry:,Warranty expense .$,$ Estimated warranty liability . $,$ To accrue warranty expense. 借: 销售费用 贷: 预计负债_ 产品质量保证,estimation techniques,If one amount withi

34、n a continuous range, equal percentage, using average as Estimated warranty liability. If one amount within a discontinuous range, Including only one Contingency, using the amount largest percentage. Including more than one Contingency, using the expected average. E.g., Product Warranties,Example,Ma

35、trix Inc. has a product and sell air conditioner company, carrying a three-year warranty against defects. Estimates warranty costs is 1%-1.5% of sales. during 2011, the sales is 5,000,000, actual warranty expenses is 40,000 ( cash, raw material is one half ) Jan 1, 2011, the Bal. of Estimated warran

36、ty liability is 60,000.,Record actualwarranty expense estimated warranty liability 40,000 cash 20,000 raw material 20,000 Record estimated warranty liability 5,000,000* (1%+1.5%)/2 = 62,500 warranty expense 62,500 estimated warranty liability 62,500,Further,Suppose the Bal. of estimated warranty lia

37、bility is 30,000, how to record ? Record actualwarranty expense estimated warranty liability 30,000 warranty expense 10,000 cash 20,000 raw material 20,000,Matrix Inc. has a product and sell air conditioner company, carrying a one-year warranty against defects. During 2011, Estimates warranty costs

38、: Warranty Costs Probability $50,000 20% $60,000 50% $70,000 30% 50,000*20% + 60,000*50% + 70,000*30%= 61,000 warranty expense 61,000 estimated warranty liability 61,000,Extended Warranty Contracts延长保修期,Extended warranties are sold separately from the product. The related revenue is not earned until

39、: Claims are made against the extended warranty, or The extended warranty period expires.,Example,Matrix Inc. has a product and sell air conditioner company, carrying a one-year warranty against defects. Customers could buy a three-year extended warranty for an additional charge. On Jan 3, 2011, Mat

40、rix Inc. sold a $60 extended warranty, covering years 2012, 2013, and 2014. January 3, 2011 Cash 60 Unearned revenue-extended warranties 60 December 31, 2012, 2013, 2014 Unearned revenue-extended warranties 20 Revenue-extended warranties 20,Premiums 赠品,Premiums included with the product are expensed

41、 in the period of sale. Premiums that are contingent on action by the customer require accounting similar to warranties.,Matrix Inc. has a product and sell air conditioner company. Customer could have a water fountain if air conditioner has been bought. Sale expense.$,$ inventory. $,$,Matrix Inc. ha

42、s a product and sell air conditioner company. Customer could have a $100 of voucher代金券 if air conditioner has been bought. During 2011, Matrix Inc. provide 2,000 vouchers. Estimated 60% of customer would use them. On Dec 31, 2012, colleted 1000 vouchers. On Dec 31, 2011 Sales expense 120,000 Estimat

43、ed premium liability 120,000 On Dec 31, 2011 Estimated premium liability 100,000 cash 100,000,Debt Guarantee 债务担保,Guarantees are commonly encountered in the commercial world. Financial guarantee contracts are initially recognized at fair value.,Example of estimating the fair value of a guarantee,Pas

44、o Company guarantees a 1,000,000 debt of Sag Company for the next three years in conjunction with selling equipment to Sag. Paso evaluates its risk of payment as follows: 1. There is no possibility that Paso will pay to honor the guarantee during year 1. 2. There is a 15% chance that Paso will pay d

45、uring year 2. If it has to pay, there is a 30% chance that it will have to pay 500,000 and a 70% chance that it will have to pay only 250,000. 3. There is a 20% chance that Paso will pay during year 3. If it has to pay, there is a 25% chance that it will have to pay 600,000 and a 75% chance that it

46、will have to pay 300,000.,The expected cash outflows from the guarantor are computed as follows: Year 1 100% chance of paying 0 = 0 Year 2 85% chance of paying 0 and a 15% chance of paying (.30 *500,000 + .70*250,000) = 325,000 325,000*15% =48,750 Year 3 80% chance of paying 0 and a 20% chance of pa

47、ying (.25 *600,000 + .75*300,000) = 375,000 375,000*20% =75,000,appropriate discount rate of 8% Fair value of the guarantee = 101,332 Cash 1,000,000 Revenue 1,000,000 Cost of goods sold 650,000 Inventory 650,000 Sales expense guarantee of customer debt 101,332 estimated Guarantee liability 101,332,L

48、itigation Claims 诉讼索赔,The corporations usually report loss contingencies due to litigation. The most common disclosure is a note to the financial statements.,Subsequent Events,When the cause of a loss contingency occurs before the year-end, a clarifying event before financial statements are issued c

49、an be used to determine how the contingency is reported.,Subsequent Events,If an event giving rise to a contingency occurs after the year-end, a liability should not be accrued.,Unasserted Claims and Assessments 未决诉讼, Is a claimor assessmentprobable?,No,Yes,Nodisclosureneeded,Unassertedclaim,Evaluat

50、e (a) the likelihood of an unfavorable outcome and(b) whether the dollar amount can be estimated. An estimated contingent loss would beaccrued if a outflow is probable and theamount can be reasonably estimated.,Example,On November 12, 2011, United Inc. filed a lawsuit against Matrix Inc. failing to

51、deliver on contracts for products and asking for damages of $50,000. On December 31, 2011, Matrixs attorney indicated that the likelihood of losing the lawsuit was probable and estimate that amount is 35,000. Claims and Assessments is unasserted. Prepare the journal entry for Matrix Inc.,Unasserted

52、Claims and Assessments,On December 31, 2011 Claim expense 35,000 Estimated claim liability 35,000,Gain Contingencies 或有资产,Two factors affect whether a gain contingency must be reported :,Have recorded “estimated liabilities” Event will be basically determinate. 基本确定,Example,On November 12, 2011, United Inc. filed a lawsuit against Matrix Inc. failing to deliver on contracts for products and asking for damages of $50,000. On De