(Financial Accounting & Reporting 2) : Lecture Aid
(Financial Accounting & Reporting 2) : Lecture Aid
(Financial Accounting & Reporting 2) : Lecture Aid
Reporting 2)
LECTURE AID
2017
Learning Competencies
• Know the recognition criteria for liabilities and their essential
characteristics.
• Identify the characteristics of a financial liability.
• Know the initial and subsequent measurements of financial
and non-financial liabilities.
• Know how to classify liabilities as current and noncurrent.
1. Payables such as accounts, notes, loans, bonds payable and accrued expenses that
are payable in cash.
2. Finance lease obligations.
3. Liabilities held for trading such as obligations to deliver financial assets borrowed
by a “short seller” (i.e. an entity that sells financial assets it has borrowed and does
not yet own).
4. Preference shares issued with mandatory redemption.
5. Security deposits received that are to be returned to tenants at the end of lease
term.
6. Obligations to deliver a variable number of own shares worth a fixed amount of
cash.
• Under IFRIC 17, the liability to pay a dividend is recognized when the
dividend is appropriately authorized and is no longer at the discretion
of the entity, which is:
1. the date when the declaration of the dividend (e.g., by management or
the board of directors) is approved by the relevant authority
(e.g., the shareholders) if the jurisdiction requires such approval, or
2. the date when the dividend is declared (e.g., by management or
the board of directors) if the jurisdiction does not require further
approval.