Chapter 11, Problem 15DQ

To determine

Concept Introduction

Current Liabilities: Current Liabilities are the debts or economic obligations that a company owes to its creditors and that have to be settled within one year or within its operating cycle, whichever period is longer.

Accrued Expenses: Accrued Expenses are a company’s current liabilities that have been incurred but are not paid yet.

Accrued compensation: Accrued Compensation is a part of accrued expenses of a company that it owes to pay to its workers for the work done by them. Since the work is performed by the employees, the company has incurred the salaries or wages expense but it has not paid its employees for the work performed. Therefore, accrued compensation becomes a liability, particularly current liability for the company.

Accrued Benefits: Accrued Benefits are a part of accrued expenses of a company that it owes to pay to its employees for the benefits earned by them. These benefits include vacation benefits and other employee benefits. Since the benefits are earned by the employees, the benefits expenses are incurred by the company but the benefits are not availed by the employees or are not paid to them by the company. Therefore, accrued compensation becomes a liability, particularly current liability for the company.

To State: The accrued expenses (liabilities) that Google reports at December 31, 2015 by referring to Google’s balance sheet in Appendix A.