Current Liabilities and Contingencies: PART II: Corporate Accounting Concepts and Issues

PART II: Corporate Accounting Concepts and Issues
Lecture 15
Current Liabilities and

Contingencies
Instructor
Adnan Shoaib
1
Learning
Learning Objectives
Objectives
1.
Describe the nature, type, and valuation of current liabilities.
2.
Explain the classification issues of short-term debt expected to

be refinanced.
3.
Identify types of employee-related liabilities.
4.
Identify the criteria used to account for and disclose gain and
loss contingencies.
5.
Explain the accounting for different types of loss contingencies.
6.
Indicate how to present and analyze liabilities and

contingencies.
Current
Current Liabilities
Liabilities and
and Contingencies
Contingencies
Current Liabilities
Contingencies
What is a liability?
Gain contingencies
What is a current
liability?
Loss contingencies
Presentation and
Analysis
Presentation of
current liabilities
Presentation of
contingencies
Analysis of current
liabilities
What
What is
is aa Liability?
Liability?
FASB, defines liabilities as:
Probable Future Sacrifices of Economic Benefits arising
from present obligations of a particular entity to transfer
assets or provide services to other entities in the future as a
result of past transactions or events.
What
What is
is aa Current
Current Liability?
Liability?
Current liabilities are obligations whose liquidation is
reasonably expected to require use of existing resources
properly classified as current assets, or the creation of other
current liabilities.
The operating cycle is the period of time elapsing between the
acquisition of goods and services and the final cash realization resulting
from sales and subsequent collections.
LO 1 Describe the nature, type, and valuation of current liabilities.
What
What is
is aa Current
Current Liability?
Liability?
Typical Current Liabilities:
Accounts payable.
Notes payable.
Current maturities of longterm debt.

Short-term obligations
expected to be refinanced.
Customer advances and

deposits.
Unearned revenues.
Sales taxes payable.
Income taxes payable.
Employee-related liabilities.
Dividends payable.
What
What is
is aa Current
Current Liability?
Liability?
Accounts Payable (trade accounts payable)
Balances owed to others for goods, supplies, or services
purchased on open account.
Time lag between the receipt of services or acquisition

of title to assets and the payment for them.
Terms of the sale (e.g., 2/10, n/30 or 1/10, E.O.M.)

usually state period of extended credit, commonly 30 to
60 days.
What
What is
is aa Current
Current Liability?
Liability?
Notes Payable
Written promises to pay a certain sum of money on a
specified future date.
Arise from purchases, financing, or other transactions.
Notes classified as short-term or long-term.
Notes may be interest-bearing or zero-interest-bearing.
What
What is
is aa Current
Current Liability?
Liability?
Interest-Bearing Note Issued
Illustration: Castle National Bank agrees to lend $100,000 on
March 1, 2012, to Landscape Co. if Landscape signs a $100,000,
6 percent, four-month note. Landscape records the cash received
on March 1 as follows:
Cash
100,000
Notes Payable
100,000
What
What is
is aa Current
Current Liability?
Liability?
If Landscape prepares financial statements semiannually, it
makes the following adjusting entry to recognize interest
expense and interest payable at June 30:
Interest calculation =
Interest expense
Interest payable
10
($100,000 x 6% x 4/12) = $2,000
2,000
2,000
What
What is
is aa Current
Current Liability?
Liability?
At maturity (July 1), Landscape records payment of the note and
accrued interest as follows.
Notes payable
Interest payable
Cash
11
100,000
2,000
102,000
What
What is
is aa Current
Current Liability?
Liability?
Zero-Bearing Note Issued
Illustration: On March 1, Landscape issues a $102,000, fourmonth, zero-interest-bearing note to Castle National Bank. The
present value of the note is $100,000. Landscape records this
transaction as follows.
Cash
100,000
Discount on notes payable

Notes payable
12
2,000
102,000
What
What is
is aa Current
Current Liability?
Liability?
If Landscape prepares financial statements semiannually, it
makes the following adjusting entry to recognize interest expense
and the increase in the note payable of $2,000 at June 30.
Interest expense
2,000
2,000
At maturity (July 1), Landscape must pay the note, as follows.

Notes payable
Cash
13
102,000
102,000
What
What is
is aa Current
Current Liability?
Liability?
(Accounts and Notes Payable) The following are selected 2012
transactions of Darby Corporation.
Sept. 1 - Purchased inventory from Orion Company on account
for $50,000. Darby records purchases gross and uses a periodic
inventory system.
Oct. 1 - Issued a $50,000, 12-month, 8% note to Orion in
payment of account.
Oct. 1 - Borrowed $75,000 from the Shore Bank by signing a 12month, zero-interest-bearing $81,000 note.
Prepare journal entries for the selected transactions.
14
What
What is
is aa Current
Current Liability?
Liability?
Sept. 1 - Purchased inventory from Orion Company on account
for $50,000. Darby records purchases gross and uses a

periodic inventory system.
Sept. 1
Purchases
Accounts payable
15
50,000
50,000
What
What is
is aa Current
Current Liability?
Liability?
Oct. 1 - Issued a $50,000, 12-month, 8% note to Orion in payment
of account.
Oct. 1
Accounts payable
50,000
Notes payable
Dec. 31
($50,000 x 8% x 3/12) = $1,000
Interest expense
Interest payable
16
50,000
1,000
1,000
What
What is
is aa Current
Current Liability?
Liability?
Oct. 1 - Borrowed $75,000 from the Shore Bank by signing a 12month, zero-interest-bearing $81,000 note.
Oct. 1
Cash
75,000
6,000
Notes payable
Dec. 31
($6,000 x 3/12) = $1,500
Interest expense
17
81,000
1,500
1,500
What
What is
is aa Current
Current Liability?
Liability?
Current Maturities of Long-Term Debt
Portion of bonds, mortgage notes, and other long-term
indebtedness that matures within the next fiscal year.
Exclude long-term debts maturing currently if they are to be:
1. Retired by assets accumulated that have not been shown
as current assets,
2. Refinanced, or retired from the proceeds of a new debt
issue, or
3. Converted into capital stock.
18
What
What is
is aa Current
Current Liability?
Liability?
Short-Term Obligations Expected to Be
Refinanced
Exclude from current liabilities if both of the following
conditions are met:
1. Must intend to refinance the obligation on a long-term
basis.
2. Must demonstrate an ability to refinance:
19
Actual refinancing.
Enter into a financing agreement.

LO 2 Explain the classification issues of short-term
debt expected to be refinanced.
What
What is
is aa Current
Current Liability?
Liability?
On December 31, 2012, Alexander Company had $1,200,000 of shortterm debt in the form of notes payable due February 2, 2013. On
January 21, 2013, the company issued 25,000 shares of its common
stock for $36 per share, receiving $900,000 proceeds after brokerage
fees and other costs of issuance. On February 2, 2013, the proceeds
from the stock sale, supplemented by an additional $300,000 cash, are
used to liquidate the $1,200,000 debt. The December 31, 2012, balance
sheet is issued on February 23, 2013.
Instructions
Show how the $1,200,000 of short-term debt should be presented on the
December 31, 2012, balance sheet, including note disclosure
20

What
What is
is aa Current
Current Liability?
Liability?
Partial Balance Sheet
Current liabilities:
Notes payable
Long-term debt:
Notes payable refinanced
$ 300,000
Total liabilities
900,000
$1,200,000
21

What
What is
is aa Current
Current Liability?
Liability?
Dividends Payable
Amount owed by a corporation to its stockholders as a result
of board of directors authorization.
Generally paid within three months.
Undeclared dividends on cumulative preferred stock not

recognized as a liability.
Dividends payable in the form of additional shares of

stock are not recognized as a liability.
22
Reported in equity.
What
What is
is aa Current
Current Liability?
Liability?
Customer Advances and Deposits
Returnable cash deposits received from customers and
employees.
23
May be classified as current or long-term liabilities.

What
What is
is aa Current
Current Liability?
Liability?
Unearned Revenues
Payment received before delivering goods or rendering
services?
24
Illustration 13-3
Unearned and Earned
Revenue Accounts

What
What is
is aa Current
Current Liability?
Liability?
Sports Pro Magazine sold 12,000 annual subscriptions on August
1, 2012, for $18 each. Prepare Sports Pros August 1, 2012,
journal entry and the December 31, 2012, annual adjusting entry.
Aug. 1
Cash
216,000
Unearned revenue
216,000
(12,000 x $18)
Dec. 31
Unearned revenue
Subscription revenue
90,000
90,000
($216,000 x 5/12 = $90,000)

25

What
What is
is aa Current
Current Liability?
Liability?
Sales Taxes Payable
Retailers must collect sales taxes from customers on
transfers of tangible personal property and on certain services
and then remit to the proper governmental authority.
26

What
What is
is aa Current
Current Liability?
Liability?
Dillons Corporation made credit sales of $30,000 which are subject to
6% sales tax. The corporation also made cash sales which totaled
$20,670 including the 6% sales tax. (a) prepare the entry to record
Dillons credit sales. (b) Prepare the entry to record Dillons cash
sales.
Accounts receivable
Sales
Sales tax payable
31,800
($30,000 x 6% = $1,800)
Cash
Sales ($20,670 1.06 = $19,500)
Sales tax payable
27
30,000
1,800
20,670
19,500
1,170
LO 2
What
What is
is aa Current
Current Liability?
Liability?
Income Tax Payable
Businesses must prepare an income tax return and
compute the income tax payable.
Taxes payable are a current liability.
Corporations must make periodic tax payments.
Differences between taxable income and accounting

income sometimes occur (Chapter 19).
28

What
What is
is aa Current
Current Liability?
Liability?
Employee-Related Liabilities
Amounts owed to employees for salaries or wages are
reported as a current liability.
Current liabilities may include:
29
Payroll deductions.
Compensated absences.
Bonuses.
LO 3 Identify types of employee-related liabilities.
What
What is
is aa Current
Current Liability?
Liability?
Payroll Deductions
Taxes:
Social Security Taxes
Income Tax Withholding

Illustration 13-5
Summary of Payroll Liabilities
30
What
What is
is aa Current
Current Liability?
Liability?
Illustration: Assume a weekly payroll of $10,000 entirely subject to
F.I.C.A. and Medicare (7.65%), federal (0.8%) and state (4%)
unemployment taxes, with income tax withholding of $1,320 and union
dues of $88 deducted. The company records the salaries and wages
paid and the employee payroll deductions as follows:
Wages and salaries expense
Withholding taxes payable
1,320
FICA taxes payable
765
Union dues payable
88
Cash
31
10,000
7,827
What
What is
is aa Current
Current Liability?
Liability?
Illustration: Assume a weekly payroll of $10,000 entirely subject to
F.I.C.A. and Medicare (7.65%), federal (0.8%) and state (4%)
unemployment taxes, with income tax withholding of $1,320 and union
dues of $88 deducted. The company records the employers payroll
taxes as follows:
Payroll tax expense
32
1,245
FICA taxes payable
765
FUTA taxes payable
80
SUTA taxes payable
400
What
What is
is aa Current
Current Liability?
Liability?
Compensated Absences
Paid absences for vacation, illness, and holidays.
Accrue a liability if all the following conditions exist.
The employers obligation is attributable to employees

services already rendered.
33
The obligation relates to rights that vest or accumulate.
Payment of the compensation is probable.
The amount can be reasonably estimated.

What
What is
is aa Current
Current Liability?
Liability?
Illustration: Amutron Inc. began operations on January 1, 2012. The
company employs 10 individuals and pays each $480 per week.
Employees earned 20 unused vacation weeks in 2012. In 2013, the
employees used the vacation weeks, but now they each earn 540
per week. Amutron accrues the accumulated vacation pay on
December 31, 2012, as follows.
Salaries and wages expense
9,600
Salaries and wages payable
9,600
In 2013, it records the payment of vacation pay as follows.
34
Salaries and wages payable
9,600
Salaries and wages expense
1,200
Cash
10,800
LO 3
What
What is
is aa Current
Current Liability?
Liability?
Profit-Sharing and Bonus Plans
Payments to certain or all employees in addition to their
regular salaries or wages.
Bonuses paid are an operating expense.
Unpaid bonuses should be reported as a current

liability.
35
Contingencies
Contingencies
An existing condition, situation, or set of
circumstances involving uncertainty as to possible gain
(gain contingency) or loss (loss contingency) to an
enterprise that will ultimately be resolved when one or
more future events occur or fail to occur.*
* FASB ASC 450-10-05-4. [Predecessor literature: Accounting for

Contingencies, Statement of Financial Accounting Standards No. 5
(Stamford, Conn.: FASB, 1975), par. 1.]
36
LO 4 Identify the criteria used to account for and

disclose gain and loss contingencies.
Gain
Gain Contingencies
Contingencies
Typical Gain Contingencies are:
1. Possible receipts of monies from gifts, donations, and
bonuses.
2. Possible refunds from the government in tax disputes.
3. Pending court cases with a probable favorable outcome.
4. Tax loss carryforwards (Chapter 19).
Gain contingencies are not recorded.

Disclosed only if probability of receipt is high.
37

Loss
Loss Contingencies
Contingencies
Contingent Liability
The likelihood that the future event will confirm the
incurrence of a liability can range from probable to
remote.
FASB uses three areas of probability:
38
Probable.
Reasonably possible.
Remote.

Loss
Loss Contingencies
Contingencies
Scorcese Inc. is involved in a lawsuit at December 31, 2012. (a)
Prepare the December 31 entry assuming it is probable that
Scorcese will be liable for $900,000 as a result of this suit. (b)
Prepare the December 31 entry, if any, assuming it is not probable
that Scorcese will be liable for any payment as a result of this suit.
(a)
Lawsuit loss
Lawsuit liability
900,000
900,000
(b) No entry is necessary. The loss is not accrued because it

is not probable that a liability has been incurred at
12/31/12.
39

Loss
Loss Contingencies
Contingencies
Illustration 13-10
40

Loss
Loss Contingencies
Contingencies
Common loss contingencies:
1. Litigation, claims, and assessments.
2. Guarantee and warranty costs.
3. Premiums and coupons.
4. Environmental liabilities.
41

Loss
Loss Contingencies
Contingencies
Litigation, Claims, and Assessments
Companies must consider the following factors, in
determining whether to record a liability with respect to
pending or threatened litigation and actual or
possible claims and assessments.
42
Time period in which the action occurred.
Probability of an unfavorable outcome.
Ability to make a reasonable estimate of the loss.
LO 5 Explain the accounting for different types of loss contingencies.
Loss
Loss Contingencies
Contingencies
Guarantee and Warranty Costs
Promise made by a seller to a buyer to make good on a
deficiency of quantity, quality, or performance in a product.
If it is probable that customers will make warranty claims
and a company can reasonably estimate the costs involved,
the company must record an expense.
43
Loss
Loss Contingencies
Contingencies
Two basic methods of accounting for warranty costs:
Cash-Basis method
Expense warranty costs as incurred, because

1. it is not probable that a liability has been
incurred, or
2. it cannot reasonably estimate the amount of
the liability.
44
Loss
Loss Contingencies
Contingencies
Two basic methods of accounting for warranty costs:
Accrual-Basis method
Charge warranty costs to operating expense in the

year of sale.
1. Method is the generally accepted method.
2. Referred to as the expense warranty approach.
45
Loss
Loss Contingencies
Contingencies
Streep Factory provides a 2-year warranty with one of its products
which was first sold in 2012. In that year, Streep spent $70,000
servicing warranty claims. At year-end, Streep estimates that an
additional $400,000 will be spent in the future to service warranty
claims related to 2012 sales. Prepare Streeps journal entry to record
the $70,000 expenditure, and the December 31 adjusting entry.
2012
Warranty expense
70,000
Cash
12/31/12
Warranty expense
Warranty liability
46
70,000
400,000
400,000
Loss
Loss Contingencies
Contingencies
Premiums and Coupons
Companies should charge the costs of premiums and
coupons to expense in the period of the sale that benefits
from the plan.
Accounting:
Company estimates the number of outstanding premium

offers that customers will present for redemption.
Company charges the cost of premium offers to Premium

Expense and credits Estimated Liability for Premiums.
47
Loss
Loss Contingencies
Contingencies
Illustration: Fluffy Cakemix Company offered its customers a large
nonbreakable mixing bowl in exchange for 25 cents and 10 boxtops.
The mixing bowl costs Fluffy Cakemix Company 75 cents, and the
company estimates that customers will redeem 60 percent of the
boxtops. The premium offer began in June 2012 and resulted in the
transactions journalized below. Fluffy Cakemix Company records
purchase of 20,000 mixing bowls as follows.
Inventory of Premium
Cash
15,000
15,000
$20,000 x .75 = $15,000

48
Loss
Loss Contingencies
Contingencies
Illustration: The entry to record sales of 300,000 boxes of cake mix
would be:
300,000 x .80 = $240,000
Cash
240,000
Sales Revenue
240,000
Fluffy records the actual redemption of 60,000 boxtops, the receipt
of 25 cents per 10 boxtops, and the delivery of the mixing bowls as
follows.
Cash [(60,000 / 10) x $0.25]
1,500
Premium Expense
3,000
Inventory of Premium
Computation: (60,000 / 10) x $0.75 = $4,500
49
4,500
LO 5
Loss
Loss Contingencies
Contingencies
Illustration: Finally, Fluffy makes an end-of-period adjusting entry
for estimated liability for outstanding premium offers (boxtops) as
follows.
Premium Expense
6,000
Premium Liability
6,000
50
Loss
Loss Contingencies
Contingencies
Environmental Liabilities
A company must recognize an asset retirement
obligation (ARO) when it has an existing legal obligation
associated with the retirement of a long-lived asset and
when it can reasonably estimate the amount of the
liability.
NOTE: The SEC argues that if the liability is within a range, and no amount
within the range is the best estimate, then management should recognize
the minimum amount of the range.
51
Loss
Loss Contingencies
Contingencies
Environmental Liabilities
Obligating Events. Examples of existing legal obligations, which
require recognition of a liability include, but are not limited to:
decommissioning nuclear facilities;
dismantling, restoring, and reclamation of oil and gas

properties;
certain closure, reclamation, and removal costs of mining

facilities;
52
closure and post-closure costs of landfills.
Loss
Loss Contingencies
Contingencies
Illustration: On January 1, 2012, Wildcat Oil Company erected an
oil platform in the Gulf of Mexico. Wildcat is legally required to
dismantle and remove the platform at the end of its useful life,
estimated to be five years. Wildcat estimates that dismantling and
removal will cost $1,000,000. Based on a 10 percent discount rate,
the fair value of the asset retirement obligation is estimated to be
$620,920 ($1,000,000 x .62092). Wildcat records this ARO as
follows.
Drilling platform
620,920
Asset retirement obligation

620,920
53
Loss
Loss Contingencies
Contingencies
Illustration: During the life of the asset, Wildcat allocates the asset
retirement cost to expense. Using the straight-line method, Wildcat
makes the following entries to record this expense.
December 31, 2012, 2013, 2014, 2015, 2016

Depreciation expense ($620,920 / 5)
124,184
Accumulated depreciation
124,184
54
Loss
Loss Contingencies
Contingencies
Illustration: In addition, Wildcat must accrue interest expense each
period. Wildcat records interest expense and the related increase in
the asset retirement obligation on December 31, 2012, as follows.
December 31, 2012

Interest expense ($620,092 x 10%)
62,092

62,092
55
Loss
Loss Contingencies
Contingencies
Illustration: On January 10, 2017, Wildcat contracts with Rig
Reclaimers, Inc. to dismantle the platform at a contract price of
$995,000. Wildcat makes the following journal entry to
record settlement of the ARO.
January 10, 2017
1,000,000
Gain on settlement of ARO

5,000
Cash
995,000
56
Loss
Loss Contingencies
Contingencies
Self-Insurance
Self-insurance is not insurance, but risk assumption.
There is little theoretical justification for the establishment of a
liability based on a hypothetical charge to insurance expense.
Illustration 13-12
57
Presentation
Presentation and
and Analysis
Analysis
Presentation of Current Liabilities
Usually reported at their full maturity value.
Difference between present value and the maturity

value is considered immaterial.
58
LO 6 Indicate how to present and analyze liabilities and contingencies.
Presentation
Presentation of
of Current
Current Liabilities
Liabilities
Illustration 13-13
59
Presentation
Presentation and
and Analysis
Analysis
If a company excludes a short-term obligation from current
liabilities because of refinancing, it should include the
following in the note to the financial statements:
1. A general description of the financing agreement.
2. The terms of any new obligation incurred or to be incurred.
3. The terms of any equity security issued or to be issued.
60
Presentation
Presentation and
and Analysis
Analysis
Actual Refinancing of Short-Term Debt
61
Illustration 13-14
Presentation
Presentation and
and Analysis
Analysis
Presentation of Contingencies
Disclosure should include:
Nature of the contingency.
An estimate of the possible loss or range of loss.
Companies should disclose certain other contingent liabilities.

1.
Guarantees of indebtedness of others.
2.
Obligations of commercial banks under stand-by letters of credit.
3.
Guarantees to repurchase receivables (or any related property)

that have been sold or assigned.
62
LO 6
Presentation
Presentation and
and Analysis
Analysis
Illustration 13-15
Disclosure of
Loss
Contingency
through
Litigation
63
LO 6
Analysis
Analysis of
of Current
Current Liabilities
Liabilities
Liquidity regarding a liability is the expected time to elapse
before its payment. Two ratios to help assess liquidity are:
Illustration: Compute these two ratios using the
information for Best Buy Co. in Illustration 13-13.
Illustration 13-19
64
Analysis
Analysis of
of Current
Current Liabilities
Liabilities
Costner Company has been operating for several years, and on
December 31, 2012, presented the following balance sheet.
Compute the current ratio:

$210,000
70,000
3.0 to 1
Compute the acid-test ratio:

$115,000
70,000
65
= 1.64 to 1
RELEVANT FACTS
66
IFRS requires that companies classify liabilities as current or noncurrent on the face of the statement of financial position (balance
sheet), except in industries where a presentation based on liquidity
would be considered to provide more useful information (such as
financial institutions).
Under IFRS, the measurement of a provision related to a

contingency is based on the best estimate of the expenditure
required to settle the obligation. If a range of estimates is predicted
and no amount in the range is more likely than any other amount in
the range, the mid-point of the range is used to measure the
liability. In GAAP, the minimum amount in a range is used.
RELEVANT FACTS
67
IFRS uses the term provisions to refer to estimated liabilities. Under

IFRS, contingencies are not recorded but are often disclosed. The
accounting for provisions under IFRS and estimated liabilities under
GAAP are very similar.
GAAP uses the term contingency in a different way than IFRS.

Contingent liabilities are not recognized in the financial statements
under IFRS, whereas under GAAP a contingent liability is sometimes
recognized.
End
End of
of Lecture
Lecture 15
15
68

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PART II: Corporate Accounting Concepts and Issues

Current Liabilities and

Describe the nature, type, and valuation of current liabilities.

Explain the classification issues of short-term debt expected to

Identify types of employee-related liabilities.

Explain the accounting for different types of loss contingencies.

Indicate how to present and analyze liabilities and

LO 1 Describe the nature, type, and valuation of current liabilities.

Current maturities of longterm debt.

Customer advances and

Sales taxes payable.

Income taxes payable.

LO 1 Describe the nature, type, and valuation of current liabilities.

Time lag between the receipt of services or acquisition

Terms of the sale (e.g., 2/10, n/30 or 1/10, E.O.M.)

LO 1 Describe the nature, type, and valuation of current liabilities.

Arise from purchases, financing, or other transactions.

Notes classified as short-term or long-term.

Notes may be interest-bearing or zero-interest-bearing.

LO 1 Describe the nature, type, and valuation of current liabilities.

LO 1 Describe the nature, type, and valuation of current liabilities.

($100,000 x 6% x 4/12) = $2,000

LO 1 Describe the nature, type, and valuation of current liabilities.

LO 1 Describe the nature, type, and valuation of current liabilities.

Discount on notes payable

LO 1 Describe the nature, type, and valuation of current liabilities.

Discount on notes payable

At maturity (July 1), Landscape must pay the note, as follows.

LO 1 Describe the nature, type, and valuation of current liabilities.

LO 1 Describe the nature, type, and valuation of current liabilities.

for $50,000. Darby records purchases gross and uses a

LO 1 Describe the nature, type, and valuation of current liabilities.

($50,000 x 8% x 3/12) = $1,000

LO 1 Describe the nature, type, and valuation of current liabilities.

Discount on notes payable

($6,000 x 3/12) = $1,500

LO 1 Describe the nature, type, and valuation of current liabilities.

LO 1 Describe the nature, type, and valuation of current liabilities.

Enter into a financing agreement.

LO 2 Explain the classification issues of short-term

LO 2 Explain the classification issues of short-term

Generally paid within three months.

Undeclared dividends on cumulative preferred stock not

Dividends payable in the form of additional shares of

May be classified as current or long-term liabilities.

LO 2 Explain the classification issues of short-term

LO 2 Explain the classification issues of short-term

($216,000 x 5/12 = $90,000)

LO 2 Explain the classification issues of short-term

LO 2 Explain the classification issues of short-term

Taxes payable are a current liability.

Corporations must make periodic tax payments.

Differences between taxable income and accounting

LO 2 Explain the classification issues of short-term

LO 3 Identify types of employee-related liabilities.

Social Security Taxes

Income Tax Withholding

LO 3 Identify types of employee-related liabilities.