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.

Q: A present obligation that is probable and for which the amount can be reliably estimated should…

A: The estimated expenses are the expenses which can be valued on the basis of past experiences or…

Q: What are Contingent Liabilities?  Give an example.  What are the factors that determine the reason…

A: A liability, the occurrence of which is uncertain that is it may or may not occur is known as a…

Q: Explain the characteristics of a liability.

A: A liability is an obligation that a person or organization has, usually in the form of money.…

Q: Under what conditions should a contingent liability berecorded?

A:

Q: Which of the following would be considered a long-term liability? a. interest payable b.…

A: Analysis of options a. interest payable Since interest will be paid within 12 months or normal cycle…

Q: Explain Options to Report Liabilities at Fair Value.

A: Introduction FASB introduces Fair Value Options to report assets and liabilities in fair value,…

Q: When should a contingent liability be recognized and reported on the financial statements?  A.…

A: Contingent liability: A liability can occur on future uncertain events.

Q: Obligations for which the amount of the future sacrifice is so uncertain that it cannot be measured…

A: Obligations for which the amount of the future sacrifice is so uncertain that it cannot be measured…

Q: Define current liabilities and list the typical liability categories included in this…

A: Current liability: Current liability is a debt that the companies need to pay the debts from…

Q: Fair Value (Liabilities) What is Fair Value for a liability? What would be an e.g? Please Explain.

A: The objective of this question is to understand the concept of 'Fair Value' in the context of a…

Q: When recognizing a contingent liability, if the future event is probable (likely) and the amount can…

A: It is a potential obligation that may arise from past events but its existence will be confirmed…

Q: Are they any specific considerations  that must be taking into account when focusing on liability…

A: Liability: A liability is the amount of money that a company owes for the benefits enjoyed.…

Q: With reference to IAS 37, identify the correct statements from the following:  I.     A contingent…

A: Contingent Liabilities In simple term contingent liabilities means unexpected loss or expenses…

Q: Q1 (a) What attributes should an item or transaction exhibit in order to be classified as a…

A: Liability is an obligation which is to be paid at some future date. It is shown in the balance…

Q: The following are grounds for liability to pay damages, except:     a. Negligence b. Fraud c.…

A: The following are grounds for liability to pay damages Negligence Fraud Contravention of the tenor…

Q: To be recorded as a liability, does the obligation have to be absolute?

A: Accounts payable, short-term loans, interest payments, bank overdrafts, and other similar short-term…

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.