LIABILITIES

A liabilities present obligations of an entity of an

entity to transfer an economic resource as a
result of past events.
PRESENT OBLIGATION ECONOMIC RESOURE
legal (a consequence of a crystallization of the definitive
binding contract or statutory concept of an accounting liability is
requirement when an entity declares cash
constructive (from normal dividend.
business practice or business accounting liability exists when
relations there is obligation to pay cash

MEASUREMENT
Initially measured at present value and subsequently measured at
amortized cost
CURRENT LIABILITIES NON-CURRENT LIABILITIES
measured, recorded initially measure at present
and reported at face value and subsequently
amount measured at amortized
cost
LONG TERM DEBT FALLING DUE WITHIN ONE
YEAR
classified as current even if original
term is longer than 12 months and an
agreement to refinance or to
reschedule payment on a long term
basis is completed after the
reporting period and before the FS
are authorized for issue
 COVENANTS
often attached to borrowing agreements which
represent undertakings by the borrower

BREACH OF COVENANTS
the liability becomes payable on demand and is classified current,
however it is non current if the lender hs agreed on or before the
end of the reporting period to provide grace period

ESTIMATED DEFERRED
LIABILITIES REVENUE
BONUS
compensation pain, % of
obligations which unearned
income before tax, % of
exist at the end of revenue income income after bonus but before
the reporting is received but tax, % of income after bonus
and after tax, % of income
period not yet earned after tax but before bonus

REFUNDABLE DEPOSITS
consist of cash or property
received from customers
but refundable after
compliance of certain
conditions
return is simply refunded
failure of return is
considered sale
 PROVISION

LIABILITY
PREMIUMS
are articles of value given to customers as result of
pasr sales or sales promotion activities.
Journal Entry Formula
Purchase of premiums
Est. Prem Liab:
Premiums xxx
Pemium to be redeemed
Cash xxx
Less: Premium redeemed
Distribution of premiums Premiums to be distri
Premium Expense xxx x (Cost - Remittance)
Premium xxx
FS Classification:
Outstanding Premiums Premiums purchased
Premium Expense xxx Less: Premiums redeemed
Est. premium liability xxx
CASH REBATE PROGRAM
variation of a premium offer
cash register receipts, barcodes,
rebate coupons and other proof of
purchase can be mailed to the
manufacturer for cash rebate
 Est. Rebate Liability Formula:
Rebate (coupons) to be redeemed
x cash rebate
Est. Rebate Liability

CASH DISCUNT COUPON

another variation of the premium offer
popular marketing tool for the purpose of stimulate sales

CUSTOMER LOYALTY PROGRAM

to build brand loyalty, retain valuable
customers and increase sales volume
MEASUREMENT
an entity shall account for the award
credits as a separately component of the
initial sale transaction, it is effectively
accounted for as a future delivery of goods
and services.

RECOGNITION
initially recognized as
deferred revenue and
subsequently recognized as
revenue when award credits
are redeemed