F4 - Liabilities

Question 1

Contingent liabilities are recorded when

Answer 1

They are probable and estimable, record the minimum amount range

Question 2

When a contingent loss is probable and range of probable losses is given

Answer 2

GAAP required the estimate to be accrued if past years, meaning if there’s a most likely amount, record the amount

Question 3

To calculate the total interest revenue over the life of an item (note)

Answer 3

Subtract total payments by the principal paid a par value

Question 4

The 4 rules that must be met in order to meet the reporting requirements for post-employment benefits:

Answer 4

1. Employer’s obligation relating to the employees’ rights to receive compensation for future absence is attributed to service already
2. The obligation relates to the rights that vest or accumulate
3. Payment of the compensation is probable
4. The amount can be reasonably estimated

Question 5

The 5 criteria’s to determine if a lease is finance lease

Answer 5

1. Ownership transfer to the lease by the end of the lease
2. Written purchase option that the lease is reasonably certain to exercise
3. Net present value of the minimum lease payment equal or exceeds (90%) of the fair value of the lease asset
4. Economic life major part (75% or more) of the asset
5. Specialized with no alternative use to the lessor
   OWNES

Question 6

Employees’ compensations for future absences should be accrued if:

Answer 6

1. Service are already rendered
2. The amount can be reasonably estimated
3. The obligation relates. It vested or accumulated rights
4. Payment of the compensation is probable