EXERCISES – Current Liabilities Problem 1: True or False

1. A liability can result from past, present or future events. (F)

2. A liability can exist even if the party to whom the obligation is owed is not
specifically
identified. (T)
3. A long-term debt that is maturing within 12 months from the end of the
reporting period is
a current liability. (T)
4. A currently maturing debt that the entity’s management intends to refinance is
presented
as noncurrent. (F)
- If refinancing is completed on or before the entity’s reporting period, it is
presented as noncurrent
- discretion
- grace period
5. Trade payables are normally presented as current liabilities. (T)
6. Amortized cost liabilities are subsequently measured at the present value of
the cash outflows from the instrument. (T)
- you are computing the present value as of the given period
7. Entity A’s long-term loan can be accelerated by the creditor if Entity A fails to
maintain a current a current ratio of at least 2:1. At the reporting date, Entity A’s
current ratio is 3:1. The loan should be classified as a current liability. (F)
- current asset: current liability or vice versa
- accelerated (payable on demand)
- no violation, favorable yung 3:1
8. A deferred tax liability that is expected to reverse within 12 months after the
reporting period is presented as a current liability. (F)
- deferred tax liability is ALWAYS presented as noncurrent liability regardless
of reversal
9. Liabilities for cash dividends are normally presented as current liabilities
unless the dividends are clearly due beyond twelve months after the reporting
period. (T)
10. Financial liabilities, except those that are classified as FVPL, are initially
measured at fair value plus transaction costs. (F)