Liability Liability is an obligation of the business to pay to the creditors in future for the goods and services purchased on account or any for other financial benefit received. It can be current liability or a non-current liability depending upon the time period in which it is paid. To classify: A notes payable for $100,000 due in 2 years is a current liability or noncurrent liability or both.

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Answer 1

Question

Chapter 10, Problem 10.1BE

(a)

To determine

Liability

Liability is an obligation of the business to pay to the creditors in future for the goods and services purchased on account or any for other financial benefit received. It can be current liability or a non-current liability depending upon the time period in which it is paid.

To classify: A notes payable for $100,000 due in 2 years is a current liability or noncurrent liability or both.

(b)

To determine

To classify: A 10 years mortgage payable of $200,000, payable in ten $20,000 annual payments is a current liability or noncurrent liability or both.

(c)

To determine

To classify: Interest payable of $15,000 on the mortgage is a current liability or noncurrent liability or both.

(d)

To determine

To classify: Accounts payable of $60,000 is a current liability or noncurrent liability or both.

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 10, Problem 10.1BE

(a)

To determine

Liability

Liability is an obligation of the business to pay to the creditors in future for the goods and services purchased on account or any for other financial benefit received. It can be current liability or a non-current liability depending upon the time period in which it is paid.

To classify: A notes payable for $100,000 due in 2 years is a current liability or noncurrent liability or both.

(b)

To determine

To classify: A 10 years mortgage payable of $200,000, payable in ten $20,000 annual payments is a current liability or noncurrent liability or both.

(c)

To determine

To classify: Interest payable of $15,000 on the mortgage is a current liability or noncurrent liability or both.

(d)

To determine

To classify: Accounts payable of $60,000 is a current liability or noncurrent liability or both.

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Answer 3

Question

Chapter 10, Problem 10.1BE

(a)

To determine

Liability

Liability is an obligation of the business to pay to the creditors in future for the goods and services purchased on account or any for other financial benefit received. It can be current liability or a non-current liability depending upon the time period in which it is paid.

To classify: A notes payable for $100,000 due in 2 years is a current liability or noncurrent liability or both.

(b)

To determine

To classify: A 10 years mortgage payable of $200,000, payable in ten $20,000 annual payments is a current liability or noncurrent liability or both.

(c)

To determine

To classify: Interest payable of $15,000 on the mortgage is a current liability or noncurrent liability or both.

(d)

To determine

To classify: Accounts payable of $60,000 is a current liability or noncurrent liability or both.

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Answer 4

Question

Chapter 10, Problem 10.1BE

(a)

To determine

Liability

Liability is an obligation of the business to pay to the creditors in future for the goods and services purchased on account or any for other financial benefit received. It can be current liability or a non-current liability depending upon the time period in which it is paid.

To classify: A notes payable for $100,000 due in 2 years is a current liability or noncurrent liability or both.

(b)

To determine

To classify: A 10 years mortgage payable of $200,000, payable in ten $20,000 annual payments is a current liability or noncurrent liability or both.

(c)

To determine

To classify: Interest payable of $15,000 on the mortgage is a current liability or noncurrent liability or both.

(d)

To determine

To classify: Accounts payable of $60,000 is a current liability or noncurrent liability or both.

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Answer 5

Chapter 10, Problem 10.1BE

(a)

To determine

Liability

Liability is an obligation of the business to pay to the creditors in future for the goods and services purchased on account or any for other financial benefit received. It can be current liability or a non-current liability depending upon the time period in which it is paid.

To classify: A notes payable for $100,000 due in 2 years is a current liability or noncurrent liability or both.

(b)

To determine

To classify: A 10 years mortgage payable of $200,000, payable in ten $20,000 annual payments is a current liability or noncurrent liability or both.

(c)

To determine

To classify: Interest payable of $15,000 on the mortgage is a current liability or noncurrent liability or both.

(d)

To determine

To classify: Accounts payable of $60,000 is a current liability or noncurrent liability or both.

Answer 6

Chapter 10, Problem 10.1BE

(a)

To determine

Liability

Liability is an obligation of the business to pay to the creditors in future for the goods and services purchased on account or any for other financial benefit received. It can be current liability or a non-current liability depending upon the time period in which it is paid.

To classify: A notes payable for $100,000 due in 2 years is a current liability or noncurrent liability or both.

Answer 7

Chapter 10, Problem 10.1BE

(a)

To determine

Liability

Liability is an obligation of the business to pay to the creditors in future for the goods and services purchased on account or any for other financial benefit received. It can be current liability or a non-current liability depending upon the time period in which it is paid.

To classify: A notes payable for $100,000 due in 2 years is a current liability or noncurrent liability or both.

Answer 8

(b)

To determine

To classify: A 10 years mortgage payable of $200,000, payable in ten $20,000 annual payments is a current liability or noncurrent liability or both.

Answer 9

(b)

To determine

To classify: A 10 years mortgage payable of $200,000, payable in ten $20,000 annual payments is a current liability or noncurrent liability or both.

Answer 10

(c)

To determine

To classify: Interest payable of $15,000 on the mortgage is a current liability or noncurrent liability or both.

Answer 11

(c)

To determine

To classify: Interest payable of $15,000 on the mortgage is a current liability or noncurrent liability or both.

Answer 12

(d)

To determine

To classify: Accounts payable of $60,000 is a current liability or noncurrent liability or both.

Answer 13

(d)

To determine

To classify: Accounts payable of $60,000 is a current liability or noncurrent liability or both.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 10 - Prob. 1Q Ch. 10 - Prob. 2Q Ch. 10 - Prob. 3Q Ch. 10 - Prob. 4Q Ch. 10 - Prob. 5Q Ch. 10 - (a) Identify three taxes commonly paid by...Ch. 10 - Prob. 7Q Ch. 10 - Prob. 8Q Ch. 10 - Contrast these types of bonds: (a) Secured and...Ch. 10 - Prob. 10Q

Solution Summary: The author explains that Liability is an obligation of the business to pay to the creditors in future for goods and services purchased on account or any financial benefit received.

Concept explainers

To classify: A 10 years mortgage payable of $200,000, payable in ten $20,000 annual payments is a current liability or noncurrent liability or both.

To classify: Interest payable of $15,000 on the mortgage is a current liability or noncurrent liability or both.

To classify: Accounts payable of $60,000 is a current liability or noncurrent liability or both.

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Chapter 10 Solutions