1 Liabilities
1 Liabilities
1 Liabilities
PAST EVENT
•Obligating event --- entity has no
alternative but to settle the
obligation (ex. acquisition of goods)
PRESENT OBLIGATION
PAST EVENT
CONTRACTUAL OBLIGATION
Investment in equity
securities
Loans payable
Financial Instruments Non-Financial
Cash √
Unearned revenue √
T-bill, T-note, T-bond √
Prepaid expense √
Income tax payable √
Accounts receivable √
Notes payable √
Property and √
equipment
Investment in equity √
securities
Loans payable √
Financial liabilities at fair value through profit
or loss (FL@FVPL) Issued debt instrument that the entity
intends to repurchase in the near term
◦ Held for Trading to make a gain from short-term
movements in interest rates
◦ Designated
CURRENT NONCURRENT
When, and only when, the entity
becomes a party to the
contractual provisions of the
instrument
Financial Liability
◦ designated at Fair Value through Profit or Loss
FAIR VALUE
(Transaction cost – expensed immediately)
◦ measured at amortized cost
FAIR VALUE -
transaction cost
Includes: Does not include:
a. Fees and commissions paid to agents, a. Debt premiums or
advisers, brokers and dealers discounts
b. Levies by regulatory agencies and b. Financing costs
securities exchanges c. Internal administrative or
c. Transfer taxes and duties holding costs
At amortized cost, using the effective
interest method (AC)
FL@FV FV FV P/L
(Trading)
Credit Risk-
FL@FV FV FV OCI
(Designated)
Others-P/L
◦ Conceptually initially PV
subsequently amortized cost
◦ Noninterest initially PV
bearing NP subsequently amortized cost
• From employees
Amounts Withheld
Examples:
estimated liability for premiums, award points,
warranties, gift certificates and bonus
On December 31, 2016, the following information are provided in the
books of Duterte Company:
noncurrent if:
a. refinancing on a long-term basis is completed on or before
the end of the reporting period (ADJUSTING EVENT)
b. entity has the discretion to refinance
CAE Company had a note payable due on March 1, 2017.
On January 31, 2017 before the issuance of the 2016
financial statements, the entity issued long-term bonds
payable. Proceeds from the bonds were used to repay the
note when it came due. How should the entity classify the
note payable in the December 31, 2016 financial
statements?