Acctg 3120 - Chapter 12

Front 1

Liability

Back 1

is a present obligation arising from past event, the settlement of which is expected to result in an outflow of resources embodying economic benefits or service potential

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Present obligation

Back 2

means that as of the reporting date, an obligating event must have already occured

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Obligating event

Back 3

is an event that creates a legal obligation or a constructive obligation

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Legal Obligation

Back 4

is an obligation that results from a contract, legislation, or other operation of law

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Constructive Obligation

Back 5

is an obligation that results from an entity's action that create a valid expectation from others that the entity will accept and discharge certain resposibilities

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TRUE

Back 6

A liability is recognized only when all of the criteria are met (T/F)

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a. It meets the definition of a liability

b. It is probable that outflow will occur

c. The obligation has a cost or value (measured reliably)

Back 7

When to recognize a Liability?

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Financial Liability

Back 8

a contractual obligation to deliver cash or another financial asset to another entity

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Financial Liability

Back 9

A contractual obligation to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the entity

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Financial Liability

Back 10

A contract that will may be settled in the entity's own equity instrument

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Financial Liabilities

Back 11

Accounts Payable, Notes Payable, Interest P, Loans P, Bonds P, and Bail Bonds P are example of what liabilities

Front 12

TRUE

Back 12

(Initial Recognition)

A financial liability is recognized when an entity becomes a party to the contractual provisions of the instrument (T/F)

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Fair Value Minus Transaction Cost

Back 13

Financial liabilities are initially measured at what?

*except for financial liabilities at fair value through surplus or deficit whose transaction costs are expensed.

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Transaction Costs

Back 14

are incremental costs that are directly attributable to the acquisotion, issue, or disposal of a financial instrument

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Amortized cost

Back 15

Financial liabilities are subsequently measured at? except for financial liabilities at fair value through surplus or deficit

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Fair Value

Back 16

Financial liabilities at fair value through surplus or deficit are subsequently measured at?

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Bond Issue Cost

Back 17

are not expensed outright, but rather a deduction when determining the carrying amount of the bonds

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Interest Expense

Back 18

Where bond issue costs are amortized over the term of the bonds?

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Increases

Back 19

The amortization (increases or decreases) interest expense?

Front 20

Debit: Cash in Bank-Local Currency, BSP

Discounts on Bonds Payable - Domestic (Discount Debit - Premium Credit)

Credit: Bonds Payable - Domestic

Back 20

Record to recognize the issuance of bonds payable to Bureau of Treasury?

Front 21

Debit: Bond Issue Cost - Domestic

Credit: Cash in Bank-Local Currency, BSP

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Record to recognize the incurrence o bond issue cost by the Btr

Front 22

Debit: Interest Expense

Credit: Discounts on Bonds Payable- Domestic

Bond Issue Cost- Domestic

Cash in Bank-Local Currecny, BSP

Back 22

Record to recognize interest expense on the bonds payable

Front 23

Debit: Interest Expense

Credit: Discounts on Bonds Payable- Domestic

Bond Issue Cost- Domestic

Cash in Bank-Local Currecny, BSP

Back 23

Record to recognize interest expense on the bonds payable

Front 24

Extinguished ( discharged, waived, cancelled, or expires)

Back 24

A financial liability is derecognized when it is?

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Provision

Back 25

is a liability of uncertain timing or amount

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True

Back 26

A provision is recognized if all the recognition criteria for a liability are met (T/F)

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Contingent Liability

Back 27

If a provision did not meet one or more criteria, the item is considered as?

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False

Back 28

Contingentn Liability is recognized as a Liability (T/F)

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Contingent Liability

Back 29

A possible obligation that arises from past events, and whose existence will be confirmed only by the occurence or non-occurence of one or more uncertain future events not wholly within the control of the entity

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Contingent Liability

Back 30

A present obligation that arises from past events, but is not recognized because it is not probable that an outflow of resources will occur and the amount of it cannot be measured with sufficient reliability

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Contingent Asset

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is a possible asset that arises from past events, and whose existence will be confirmed only by the occurence or non-occurence of one or more uncertain future events not wholly within the control of the entity

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Recognize and Disclose

Back 32

A liability that is probable is?

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Disclose only

Back 33

A liability that is possible is?

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Ignored

Back 34

A Liability that is remote is?

Front 35

Disclose only

Back 35

An Asset that is probable is?

Front 36

Ignore

Back 36

An asset that is possible is?

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Ignored

Back 37

An asset that is remote is?

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Entity's best estimate

Back 38

A provision is measured at the?

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Present value of the settlement amount discounted at a pre-tax rate

Back 39

If the effect of time value of money is material the provision is measured at?

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Shall not be

Back 40

Gains from the expected disposal of assets (shall or shall not) be taken into account in measuring a provision

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Reversed

Back 41

If it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation, the provision shall be?

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Shall

Back 42

A provision (shall or shall not) be used only for expenditures for which the provision was originally recognized

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Reimbursement asset

Back 43

If another party is expected to reimburse the settlement amount of a provision, what is recognized and presented in the statement of financial position separately from the provision?

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shall not

Back 44

The amount recognized for the reimbursement (shall or shall not) exceed the amount of the provision

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True

Back 45

No provision shall be recognized for expected net deficits from future operating activities. (T/F)

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Onerous Contract

Back 46

A contract is deemed as? if the unavoidable costs of settling the obligations under the contract exceed the economic benefits expected to be received from it.

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Provision

Back 47

The obligation under an onerous contract is recognized as?

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Restructuring

Back 48

It is a program that is planned and controlled by managemnet, and materially changes either the scope of an entity's activities or the manner in which those activities are carried out.

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Legal Obligation

Back 49

This exists if at the reporting date, the entity has entered into a binding agreement to sell or transfer an operation

Front 50

Legal Obligation

Back 50

This exists if at the reporting date, the entity has entered into a binding agreement to sell or transfer an operation

Front 51

Constructive Obligation

Back 51

This exists if at the reporting date, detailed formal plan for the resrtructuring and the plan is announced to those affected by it are both present

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Restructuring provision

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It includes only the direct costs resulting from the restructuring. It does not include costs associated with the ongoin g activities of the entity