A. It is probable that an outflow of economic benefits will be required to settle an obligation B. The amount of the obligation can be measured reliably C. The amount of the obligation must be definite D. It is probable that an outflow of economic benefits will be required to settle an obligation and the amount of obligation can be measured reliably.

A. It is probable that an outflow of economic benefits will be required to settle an obligation B. The amount of the obligation can be measured reliably C. The amount of the obligation must be definite D. It is probable that an outflow of economic benefits will be required to settle an obligation and the amount of obligation can be measured reliably.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter4: Balance Sheet: Presenting And Analyzing Resources And Financing

Section: Chapter Questions

Problem 3Q

See similar textbooks

Similar questions

Pursuant to the conceptual framework, for an item to be characterised as a liability the definition of liabilities must be applicable to the transaction or event, and the recognition criteria should also be satisfied. Applying the definition of liabilities, there are three key components in the definition of ‘liability’, these being:1. There must be an expected future disposition of economic benefits to other entities.2. There must be a present obligation.3. A past transaction or other event must have created the obligation.Required:Take any two examples of liabilities and test if they meet all three requirements.
An obligation that is contingent on the occurrence of a future event should be reported in the statement of financial position as a liability if: a. The amount of the obligation can be reasonably estimated. b. The future event is likely to occur. c. The occurrence of the future event is at least reasonably possible and the amount is known d. The occurrence of the future event is probable and the amount can be reasonably estimated.
To be recorded as a liability, does the obligation have to be absolute?
A contingent liability should be recorded in the financial statements when the: Select one: a. Contingent event is probable and the amount can be reasonably estimated. b. Contingent event is probable regardless of whether the amount can be reasonably estimated c. Contingent event is reasonably possible or probable regardless of whether the amount can be reasonably estimated d. Contingent event is reasonably possible and the amount can be reasonably estimated
1. Which of the following is not an essential characteristic of a liability? * a. It is a present obligation that entails settlement by probable future transfer or use of cash, goods or services. b. The liability must be an unavoidable obligation. c. The transaction or other event creating the obligation must have already occurred. d. The obligation must be settled to an identifiable party.
A provision should be recognized when: O a. Present obligation from a past event, outflow that will be required to settle, and Reliable estimate can be made. O b. There is contingency. O C. Estimate is made and there is evidence readily available. O d. After the event has been follow through and there is a liability present.
Fair Value (Liabilities) What is Fair Value for a liability? What would be an e.g? Please Explain.
How is present value related to the concept of a liability?
Determine if this shall result in recognition of liabilities 14.Violation of the terms of a contract; it is less than probable but more than remote that there will be outflow of economic benefits a. yes b. no
1. An SME shall measure a provision a. at fair value b. at cost c. at the best estimate of the amount required to settle the obligation at the reporting date. d. any of these
Which of the following is not a criterion that must be met for an item to be classified as a liability? A certain cash payment will occur in the future. A sacrifice will require the entity’s assets or services. There is a probable future sacrifice. There is a present obligation that results from a past transaction.
The accrual of a contingent liability and the related loss should be recorded when the a. Loss resulting from a future event may be material in relation to income. b. Future event that gives rise to the liability is unusual in nature and nonrecurring. c. Amount of the loss resulting from the event is reasonably estimated and the occurrence of the loss is probable. d. Event that gives rise to the liability is unusual and its occurrence is probable.