《libby2ce-ch-10——北美会计原理》由会员分享，可在线阅读，更多相关《libby2ce-ch-10——北美会计原理（57页珍藏版）》请在金锄头文库上搜索。
1、,Financial Accounting,Robert Libby, Patricia A. Libby, Daniel G. Short, George Kanaan, Maureen Gowing,Second CANADIAN edition,Chapter 10,Reporting and Interpreting Liabilities,Business Background,The acquisition of assets is financed from two sources:,Business Background,The mix of debt and equity f
2、or a company is called the capital structure:,Debt - funds from creditors,Equity - funds from owners,Business Background,Debt is considered riskier than equity.,Interest is a legal obligation.,Creditors can force bankruptcy.,Liabilities Defined and Classified,Liabilities are obligations arising from
3、 past transactions that will be settled in the future by some transfer or use of assets provision of service.,Maturity = 1 year or less,Maturity 1 year,Liabilities Defined and Classified,Liabilities are measured at their current cash equivalent (the amount a creditor would accept to cancel the debt)
4、 at the time incurred.,Liabilities Defined and Classified,Current Ratio = Current Assets Current Liabilities,Working Capital = Current Assets - Current Liabilities,An important indicator of a companys ability to meet its current obligations. Two commonly used measures:,Current Ratio,Petro-Canada has
5、 current liabilities of $1,986 million and current assets of $2,898 million at December 31, 2004. The current ratio is . . .,Current Liabilities,Accounts Payable Turnover Ratio,The 2004 ration for Petro-Canada is calculated as follows:,= $6,704 $2,023* = 3.33,* ($1,822 + $2,223) 2 = $2,023,Accounts
6、Payable Turnover Ratio,This ratio measures a how efficient is management in meeting its obligations to suppliers.,Note Payable,The time value of money is interest that is associated with the use of money over time.,Interest is the compensation to the lender for giving up the use of their money for a
7、 period of time. To the lender, interest is a revenue. To the borrower, interest is an expense.,Interest,The interest formula includes three variables that must be considered when computing interest:,Interest = Principal Interest Rate Time,Interest,When computing interest for one year, “Time” equals
8、 1. When the computation period is less than one year, then “Time” is a fraction.,Petro-Canada borrows $100,000 for 2 months at an annual interest rate of 12%. Compute the interest on the note for the loan period.,Interest,Interest,Petro-Canada borrows $100,000 for 2 months at an annual interest rat
9、e of 12%. Compute the interest on the note for the loan period.,Current Portion of Long-Term Debt,Any portion of a note payable that is due within one year, or the operating cycle, whichever is longer.,Deferred revenue is recorded.,Deferred Revenues and Service Obligations,Deferred revenue is a liab
10、ility account.,Cash is collected from the customer before the revenue is actually earned.,Cash is received in advance.,Earned revenue is recorded.,As the earnings process is completed . . .,Deferred Revenues and Service Obligations,Cash is collected from the customer before the revenue is actually e
11、arned.,Deferred revenue is recorded.,Cash is received in advance.,Contingent Liabilities,Potential liabilities that arise because of events or transactions that have already occurred.,Long-Term Liabilities,Creditors often require the borrower to pledge specific assets as security for the long-term l
12、iability.,Maturity = 1 year or less,Maturity 1 year,Long-Term Liabilities,Its going to take my company years to pay for this project!,Sources for Long-Term Loans,Relatively small debt needs can be filled from single sources.,Banks,Insurance Companies,or,Pension Plans,or,Sources for Publicly Issued D
13、ebt,Significant debt needs are often filled by issuing bonds to the public.,Cash,Bonds,Borrowing in Foreign Currencies,When a company has operations in a foreign country, it often borrows in the local currency. This reduces exchange rate risk. Because interest rates vary from country to country, com
14、panies may borrow in the foreign market with the lowest interest rate.,Lease Liabilities,When a company leases an asset on a short term basis, the agreement is called an operating lease,An Operating Lease does not meet any of the four criteria established by GAAP and does not cause the recording of
15、an asset and liability A Capital Lease meets at least one of the four criteria established by GAAP and results in the recording of an asset and liability,Lease Liabilities,The lease term is 75 % or more of the assets expected economic life Ownership of the asset is transferred to the lessee at the e
16、nd of the lease term The lease contract permits the lessee to purchase the asset at a price that is lower than its fair market value The PV of the lease payments is 90% or more of the fair market value of the asset when the lease is signed,If a lease meets any of the following criteria, it is considered a Capital Asset:,Now lets turn our attention to present value concepts.,Present and Future Value Concepts,Money can grow over time, because it can earn inter
