Exam 10: Reporting and Interpreting Bond Securities

Under IFRS, a distinction is made between provisions and contingencies. Provisions are estimated liabilities that are reported on the statement of financial position whereas contingencies are not recognized as liabilities because of the uncertainty of the amount and timing of future payments.

The trade payables turnover ratio can be manipulated by management through paying off more of their vendors at the end of the year, even though they have been paying late all year, so their ratio would look acceptable.

The following is a partial list of account balances for VanBuskirk Inc. as of December 31, 20B: Required: Prepare the liability section of VanBuskirk's classified statement of financial position for December 31, 20B.

If any portion of a long-term debt is to be paid in the next year, the entire debt should be classified as a current liability.

Future Income taxes are caused by which of the following?

When the current assets of a company such as trade receivables or inventory increase during the year, the increase provides additional cash inflow from operating activities.

1. What is a contingent liability? 2. When must a contingent liability be recorded through a journal entry? 3. When should a contingent liability be disclosed in the footnotes to the financial statements? 4. When is disclosure of a contingent liability not required?

A 9% six-month note for $10,000 was recorded on October 1. What journal entry would be recorded at the year end of December 31 if interest is payable at maturity?

Contingencies are disclosed in a note if it is probable that cash of other assets will be required to settle the obligation, or if the amount of the obligation cannot be measured with sufficient reliability.

Hallberg Company reported total assets of $165,000; current assets of $22,000; total shareholders' equity of $57,000; and non current liabilities of $85,000. Required: (show computations). Compute Working Capital. $________

A contingent liability that is "probable" and can be "reasonably estimated" must be accrued and reported as a liability.

In 2012, The W D Company reported the following increases or decreases in current assets and current liabilities. Identify whether each of these increases or decreases caused cash to increase or decrease. Show increases with a (+) in front of the amount and decreases with a (-) in front of the amount in the column labelled cash effect.