Lourdios J.

Edullantes BSA-2

ASSIGNMENT.
A. REFINANCING AGRREMMENT
The legislation provides for two types of refinancing
agreement, Individual Agreements which can be signed by one
or more creditors, once they improve the debtor’s financial
position, and Collective Agreements, which affect a group of
creditors, financial and otherwise, or all financial creditors.
Collective Agreements, in turn, can be legally approved or not
legally approved.
Measurement: Refinancing Agreements measures the
Approval of refinancing agreements-
The percentage of financial creditors needed to sign a
refinancing agreement so that it can be legally approved and
thus not be cancelled, has been reduced from 55% to 51%. The
scope of application of the financial creditors affected by the
agreement has also been expanded. It now includes all
creditors in possession of a financial liability, whether or not
these are subject to financial supervision, except in the case of
commercial operations or public law creditors. Furthermore,
creditors who are considered to have a special relationship
with the debtor but are still affected by the agreement will not
be taken into account for the calculation of percentages to
approve refinancing agreements.

In the case of financial creditors who have not signed, or who

opposed, the refinancing agreement, certain effects of the
refinancing agreement will still extend to them, all depending,
of course, on the number of financial creditors who have signed
the agreement. These effects may include possible waiting
periods of up to ten years, unlimited debt release, conversions
of debt into capital, participative loans or nonrecourse loans, or
entitlements for payment of debts.
The new regulations do not consider creditors who have
capitalized their credits and thus become partners of the
insolvent company as having a special relationship with the
debtor. This is to encourage this type of refinancing operation
without the subordination of credits usually requires the party
in question to hold the condition of shareholder in the
insolvent company.

B. LIABILITY ON DEMAND
Demand Liabilities are repayable on demand. Saving
bank, current are example of demand Liability.
Demand liabilities include all liabilities which are payable
on demand that include current deposits, demand liabilities
portion of savings bank deposits, margins held against
letter of credit/guarantees, balances in overdue fixed
deposits, cash certificates and cumulative/recurring
deposits, outstanding Telegraphic Transfers (TTs), Mail
transfer (MTs), Demand Draft, unclaimed deposits, credit
balances in the cash credit amount and deposits held as
security for advances which are payable on demand. Money
at Call and Short Notice from outside the Banking System
should be shown against liability to others.

C. UNEARNED REVENUE
Unearned Revenue is money received by an individual or
company for a service or product that has yet to be
provided. It can be thought of as “Prepayment” for goods or
services that a person or company is expected to supply to
the purchaser at a later date.
EXAMPLE OF THE JOURNAL ENTRY FOR UNEARNED
REVENUE:
Debit credit
Unearned Revenue Earned Revenue
MEASUREMENT: Unearned Revenue includes investment-type
income such as taxable interest, ordinary dividends, and capital
gain distributions. It also includes unemployment
compensation, taxable social security benefits, pensions,
annuities, cancellation of debt, and distributions of unearned
income from a trust.

D. DEFERED REVENUE
Deferred Revenue is money received by a company in
advance of having earned it. In other words, deferred
revenues are not yet revenues and therefor cannot yet be
reported on the income statement. As a result, the
unearned amount must be deferred to the company’s
balance sheet where it will be reported as a liability.
The title of the general ledger liability account may have
the title of Unearned Revenues, Deferred Revenues, or
Customer Deposits. As the deferred amount is earned, it
should be moved from Unearned Revenues to an income
statement revenue account (such as Sales Revenue, Service
Revenues, Fees Earned, etc)

Example of Deferred Revenue:

to illustrate deferred revenues, let’s assume that a company
designs websites and has been asked to provide a price quote
for a new website. The design company states that it can
complete the new website for 70,000. The terms require a
payment of $30,000 at the time the contract is signed and
$40,000 at the end of the project, which is estimated to take 60
days. The company agrees to begin working on the project 10
days after the $30,000 is received.
Measuremet: The deferred revenue amounts increase by any
additional deposits and advance payments and decrease by the
amount of revenue earned during the accounting period.
Now let's assume that on December 27, the design company
receives the $30,000 and it will begin the project on January 4.
Therefore, on December 27, the design company will record a
debit of $30,000 to Cash and a credit of $30,000 to Deferred
Revenues. On December 31, its balance sheet will report a
current liability of $30,000 with the description Deferred
revenues.

As of January 31 the company has completed 2/7 of the work.

Therefore, it will record an adjusting entry dated January 31
that will debit Deferred Revenues for $20,000 and will credit
the income statement account Design Revenues for $20,000.
Thus, the January 31 balance sheet will report Deferred
revenues of $10,000 (the company's remaining
obligation/liability from the $30,000 it received on December
27).

E. GIFT CERTIFICATE

Gift certificates (and gift cards) are often sold by a retailer to a

buyer for cash. The buyer can then redeem the gift certificate
or give it to another person who can redeem the gift certificate
for merchandise or services.

Accounting for the Sale of Gift Certificates

The sale of a gift certificate should be recorded with a debit to
Cash and a credit to a liability account such as Gift Certificates
Outstanding.

Note that revenue is not recorded at this point. Rather, the

retailer is recording its obligation/liability to provide
merchandise or services for the amount of the certificate sold.