Wiley GAAP 2013: Interpretation and Application of Generally Accepted Accounting Principles

CHAPTER 19

CURRENT LIABILITIES AND CONTINGENCIES

Perspective and Issues

Definitions of Terms

Concepts, Rules, and Examples

Amount and Payee Known

Demand notes with scheduled repayment terms

Increasing-rate debt

Classification of long-term obligations when there are violations of covenants

Classification of borrowings outstanding under certain revolving credit agreements

Short-term obligations expected to be refinanced

Payee Known but Amount May Have to Be Estimated

Payee Unknown and the Amount May Have to Be Estimated

Environmental remediation liabilities

Contingencies

Loss contingency

Unasserted claims or assessments

Estimate versus contingency

Guarantees

Fees for guaranteeing a loan

Impact of ASC 460 on revenue recognition on sales with a guaranteed minimum resale value

Disclosure requirements

Subsequent Events

Offsetting of Assets and Liabilities

PERSPECTIVE AND ISSUES

Presenting a statement of financial position that classifies assets and liabilities into current and noncurrent categories enables the reader of the financial statements to readily compute important measures of liquidity and solvency such as working capital (defined as current assets minus current liabilities) and current ratio (current assets divided by current liabilities). The amount of working capital, which is the relatively liquid portion of total entity capital, is closely monitored to gauge the ability of an entity to repay its obligations as they become due.

Accounting Standards Codification (ASC) 210-10-20 ...