NON-CURRENT (LONG-TERM) LIABILITIES
After completing this chapter, you will be able to do the following:
- determine the initial recognition, initial measurement, and subsequent measurement of bonds;
- describe the effective interest method and calculate interest expense, amortisation of bond discounts/premiums, and interest payments;
- explain the derecognition of debt;
- describe the role of debt covenants in protecting creditors;
- describe the financial statement presentation of and disclosures relating to debt;
- explain motivations for leasing assets instead of purchasing them;
- distinguish between a finance lease and an operating lease from the perspectives of the lessor and the lessee;
- determine the initial recognition, initial measurement, and subsequent measurement of finance leases;
- compare the disclosures relating to finance and operating leases;
- compare the presentation and disclosure of defined contribution and defined benefit pension plans;
- calculate and interpret leverage and coverage ratios.
A non-current liability (long-term liability) broadly represents a probable sacrifice of economic benefits in periods generally greater than one year in the future. Common types of non-current liabilities reported in a company's financial statements include long-term debt (e.g., bonds payable, long-term notes payable), finance leases, pension liabilities, and deferred tax liabilities. This chapter focuses ...