会计英语第四版叶建芳.ppt

YESUNAccountingEnglish 1 Lesson7 Liabilities YESUNAccountingEnglish 2 TheNatureofLiabilities I O U Definedasdebtsorobligationsarisingfrompasttransactionsorevents Maturity 1yearorless Maturity 1year YESUNAccountingEnglish 3 DistinctionBetweenDebtandEquity Theacquisitionofassetsisfinancedfromtwosources Fundsfromcreditors withadefiniteduedate andsometimesbearinginterest Fundsfromowners DEBT EQUITY YESUNAccountingEnglish 4 AccountsPayable Short termobligationstosuppliersforpurchasesofmerchandiseandtoothersforgoodsandservices MerchandiseInventoryinvoices Shippingcharges Utilityandphonebills Officesuppliesinvoices YESUNAccountingEnglish 5 NotesPayable CurrentNotesPayable NoncurrentNotesPayable TotalNotesPayable Whenacompanyborrowsmoney anotepayableiscreated CurrentPortionofNotesPayableTheportionofanotepayablethatisduewithinoneyear oroneoperatingcycle whicheverislonger YESUNAccountingEnglish 6 NotesPayable PROMISSORYNOTELocationDateafterthisdatepromisestopaytotheorderofthesumofwithinterestattherateofperannum signedtitle Miami Fl Nov 1 1999 Sixmonths PorterCompany JohnCaldwell SecurityNationalBank 10 000 00 12 0 treasurer YESUNAccountingEnglish 7 NotesPayable OnNovember1 1999 PorterCompanywouldmakethefollowingentry YESUNAccountingEnglish 8 Interestexpenseisthecompensationtothelenderforgivinguptheuseofmoneyforaperiodoftime Theliabilityiscalledinterestpayable Tothelender interestisarevenue Totheborrower interestisanexpense InterestRateUp InterestPayable YESUNAccountingEnglish 9 WhatentrywouldPorterCompanymakeonDecember31 thefiscalyear end InterestPayableExample YESUNAccountingEnglish 10 InterestPayableExample OnDecember31 PorterCompanywouldrecordinterestpayablewiththefollowingentry 10 000 12 2 12 200 YESUNAccountingEnglish 11 PayrollLiabilities Employersincurseveralexpensesandliabilitiesfromhavingemployees YESUNAccountingEnglish 12 PersonalincomeTaxes Housingfund UnemploymentInsurance etc VoluntaryDeductions NetPay GrossPay PayrollLiabilities YESUNAccountingEnglish 13 Earnedrevenueisrecorded Astheearningsprocessiscompleted Deferredrevenueisrecorded Cashisreceivedinadvance UnearnedRevenue Cashissometimescollectedfromthecustomerbeforetherevenueisactuallyearned YESUNAccountingEnglish 14 DeferredIncomeTaxes Corporationspayincometaxesfollowingtaxlaw YESUNAccountingEnglish 15 Thedifferencebetweentaxexpenseandtaxpayableisrecordedinanaccountcalleddeferredtaxes Thetaxlawisthesetofrulesforpreparingtaxreturns Financialstatementincometaxexpense incometaxespayable GAAPisthesetofrulesforpreparingfinancialstatements Resultsin Resultsin Usually DeferredIncomeTaxes YESUNAccountingEnglish 16 ExaminetheDecember31 1998informationforX OffInc X Offusesstraight linedepreciationforfinancialreportingandaccelerateddepreciationforincometaxreporting X Off staxrateis30 DeferredIncomeTaxesExample YESUNAccountingEnglish 17 Theincometaxamountcomputedbasedonfinancialstatementincomeisincometaxexpensefortheperiod DeferredIncomeTaxesExample ComputeX Off sincometaxexpenseandincometaxpayable YESUNAccountingEnglish 18 ComputeX Off sincometaxexpenseandincometaxpayable Incometaxesbasedontaxreturnincomearethetaxespayablefortheperiod DeferredIncomeTaxesExample YESUNAccountingEnglish 19 Thedeferredtaxfortheperiodof 36 000isthedifferencebetweenincometaxexpenseof 45 000andincometaxpayableof 9 000 DeferredIncomeTaxesExample YESUNAccountingEnglish 20 Anexistingcondition situation orsetofcircumstancesinvolvinguncertaintyastopossibleasset contingentasset orliability contingentliability thatwillultimatelyberesolvedwhenoneormorefutureeventsoccurorwhensucheventoreventsfailtooccur Contingency Defined YESUNAccountingEnglish 21 Contingentassetsareclaimsorrightstoreceiveassets whichmaybecomevalideventually Examplesare PendinglitigationwhoseprobableoutcomeisfavorablePossibletaxrefundsintaxdisputesContingentassetsarenotaccrued Contingentassets YESUNAccountingEnglish 22 Contingentliabilityinvolvesituationsofpossiblelossthataredependentonsomefutureevent s Thelikelihoodofoccurrenceoftheeventmaybe Remote slight Reasonablypossible morethanremotebutlessthanlikely Probable likely Contingentliability General YESUNAccountingEnglish 23 Estimatedlossesfromcontingentliabilityareaccruedasliabilitiesif Itisprobablethataliabilityhasbeenincurred andTheamountoflosscanbereasonablyestimated Theinterpretationofthesetermsisoftenbasedonlawyers opinions Contingentliability Accrual YESUNAccountingEnglish 24 Todeterminewhetheraliabilityshouldberecorded evaluate ThetimeperiodinwhichtheunderlyingcauseofactionoccurredTheprobabilityofanunfavorableoutcomeTheabilitytomakeareasonableestimateoflossTodeterminetheprobabilityofoutcome evaluate NatureoflitigationandprogressofcaseOpinionoflegalcounselResponsebymanagement Litigation ClaimsandAssessments YESUNAccountingEnglish 25 TheConceptofPresentValue 1 000investedtodayat10 Moneycangrowovertime becauseitcanearninterest YESUNAccountingEnglish 26 1 000investedtodayat10 In5yearsitwillbeworth 1 610 51 In25yearsitwillbeworth 10 834 71 PresentValue FutureValue TheConceptofPresentValue YESUNAccountingEnglish 27 Howmuchisafutureamountworthtoday Today PresentValue FutureValue Interestcompoundingperiods TheConceptofPresentValue YESUNAccountingEnglish 28 Howmuchisafutureamountworthtoday Threepiecesofinformationmustbeknowntosolveapresentvalueproblem Thefutureamount Theinterestrate i Thenumberofperiods n theamountwillbeinvested TheConceptofPresentValue YESUNAccountingEnglish 29 Twotypesofcashflowsareinvolvedwithbonds Today Principalpaymentatmaturity Periodicinterestpaymentscalledannuities Maturity TheConceptofPresentValue YESUNAccountingEnglish 30 ThePresentValueConceptandBondPrices Thesellingpriceofthebondisdeterminedbythemarketbasedonthetimevalueofmoney YESUNAccountingEnglish 31 ThePresentValueConceptandBondPrices Thesellingpriceofthebondisdeterminedbythemarketbasedonthetimevalueofmoney YESUNAccountingEnglish 32 BondsPayable Bondsusuallyinvolvetheborrowingofalargesumofmoney calledprincipal Theprincipalisusuallypaidbackasalumpsumattheendofthebondperiod Individualbondsareoftendenominatedwithaparvalue orfacevalue of 1 000 YESUNAccountingEnglish 33 BondsPayable Bondsusuallycarryastatedrateofinterest alsocalledacontractrate Interestisnormallypaidsemiannually Interestiscomputedas Interest Principal StatedRate Time YESUNAccountingEnglish 34 BondsPayable Bondsareissuedthroughanintermediarycalledanunderwriter Bondscanbesoldonorganizedsecuritiesexchanges Bondpricesareusuallyquotedasapercentageofthefaceamount Forexample a 1 000bondpricedat102wouldsellfor 1 020 YESUNAccountingEnglish 35 TypesofBonds MortgageBonds ConvertibleBonds JunkBonds DebentureBonds YESUNAccountingEnglish 36 Bondsentries CashproceedsDiscountonBPface proceedsBondspayablefaceCashproceedsBondspayablefacePremiumonbondspayableproceeds face YESUNAccountingEnglish 37 Straight LineAmortizationofBondDiscount Thismethodamortizesthebonddiscountbydividingitintoequalamountsforeachinterestperiod GraniteCorp wouldamortizethe 7 500discountover20periodswithinterestpaidat 50 000 7 500 20 375perperiod YESUNAccountingEnglish 38 July1InterestExpense50 375Cash50 000DiscountonBondsPayable375Paidsemiannualinterestandamortizeddiscountonbondspayable Straight LineAmortizationofBondDiscount YESUNAccountingEnglish 39 GraniteCorp solda10 10 year 20periods 1 000 000bondissueatapriceof101onJan 1 Cash1 010 000BondsPayable1 000 000PremiumonBondsPayable10 000Issuedbondspayableatapremium IssuingBondsPayableataPremium YESUNAccountingEnglish 40 IssuingBondsPayableataPremium GraniteBalanceSheet immediatelyafterissuanceofthebonds Long termliabilities Bondspayable 10 due20 xx 1 000 000Premiumofbondspayable10 000 1 010 000 YESUNAccountingEnglish 41 July1InterestExpense49 500PremiumonBondsPayable500Cash50 000Paidsemiannualinterestandamortizedpremiumonbondspayable Straight LineAmortizationofBondPremium YESUNAccountingEnglish 42 GraniteBalanceSheet December31 Long termliabilities Bondspayable 10 due20 xx 1 000 000Premiumonbondspayable9 000 1 009 000 ReportingBondsPayable YESUNAccountingEnglish 43 AdjustingEntriesforInterestExpense SanAntonioCorporationissued 150 000ofits8 10 yearbondsata 3 000discountonOctober1 2002 TheinterestpaymentsoccuronMarch31andSeptember30eachyear SanAntonioclosesitsbooksonDecember31 Whataccountsareinvolved YESUNAccountingEnglish 44 AdjustingEntriesforInterestExpense InterestPayable 150 000 8 3 12 3 000DiscountAmortization 3 000 10 3 12 75InterestExpense 3 000 75 3 075Whatistheadjustingentry YESUNAccountingEnglish 45 AdjustingEntriesforInterestExpense December31 2002InterestExpense3 075InterestPayable3 000DiscountonBondsPayable75Accruedthreemonths interestandamortizeddiscountonbondspayable WhatistheentryonMarch31 2003 YESUNAccountingEnglish 46 AdjustingEntriesforInterestExpense March31 2003InterestExpense3 075InterestPayable3 000Cash6 000DiscountonBondsPayable75Paidsemiannualinterest partofwhichwasaccrued andamortizedthreemonths discountonbondspayable YESUNAccountingEnglish 47 Effective InterestMethodofAmortization Theeffective interestmethodkeepsinterestexpenseatthesamepercentageoveranybond slife Generallyacceptedaccountingprinciplesrequirethatinterestexpensebemeasuredusingtheeffective interestmethod YESUNAccountingEnglish 48 Effective InterestMethod BondDiscount AssumethatGraniteCorp issues 100 000ofits9 bondsatadiscountof 3 851 atatimewhenthemarketrateofinterestis10 Thesebondsmatureinfiveyearsandpayinterestsemiannually YESUNAccountingEnglish 49 Effective InterestMethod BondDiscount Cash96 149DiscountonBondsPayable3 851BondsPayable100 000Toissue10 10 yearbondsatadiscount YESUNAccountingEnglish 50 Effective InterestMethod BondDiscount Whatistheinterestexpenseattheendofperiodone 96 149 10 6 12 4 807Whatistheinterestpaymentattheendofperiodone 100 000 9 6 12 4 500 4 807 4 500 307amortization YESUNAccountingEnglish 51 Effective InterestMethod BondDiscount EndofCarryingInterestCashPeriodValueExpensePaidAmortizationIssue96 149Date196 4564 8074 500307296 7794 8234 500323397 1184 8394 500339497 4744 8564 500356 YESUNAccountingEnglish 52 BondsSoldBetweenInterestDates Bondsareoftensoldbetweeninterestdates Thesellingpriceofthebondiscomputedas YESUNAccountingEnglish 53 EarlyRetirementofDebt Gainsorlossesincurredasaresultofretiringbondsshouldbereportedontheincomestatement YESUNAccountingEnglish 54 InstallmentNotesPayable Long termnotesthatcallforaseriesofinstallmentpayments EachpaymentcoversinterestfortheperiodANDaportionoftheprincipal Witheachpayment theinterestportiongetssmallerandtheprincipalportiongetslarger YESUNAccountingEnglish 55 AllocatingInstallmentPaymentsBetweenInterestandPrincipal Identifytheunpaidprincipalbalance UnpaidPrincipal Interestrate Interestexpense Installmentpayment Interestexpense Reductioninunpaidprincipalbalance Computenewunpaidprincipalbalance YESUNAccountingEnglish 56 AllocatingInstallmentPaymentsBetweenInterestandPrincipal OnJanuary1 1999 RocketCorp borrowed 7 851 57fromFirstBankofRiverCity Theloanwasafive yearloanandhadaninterestrateof10 Theannualpaymentis 2 000 PrepareanamortizationtableforRocketCorp sloan YESUNAccountingEnglish 57 AllocatingInstallmentPaymentsBetweenInterestandPrincipal Now preparetheentryforthefirstpaymentonJanuary1 2000 YESUNAccountingEnglish 58 AllocatingInstallmentPaymentsBetweenInterestandPrincipal Theinformationneededforthejournalentrycanbefoundontheamortizationtable Thepaymentamount theinterestexpense andtheamounttocredittoprincipalareallonthetable YESUNAccountingEnglish 59 EndofLesson7