Slide 10-1 Chapter 10 Liabilities Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Slide 10-1 Irwin/McGraw-Hill Chapter 10 Liabilities
Slide 10-2 The Nature of liabilities Defined as debts or obligations arising from past transactions or events Maturity 1 year or less Maturity >1 year Current Noncurrent Liabilities Liabilities LO U Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Slide 10-2 Irwin/McGraw-Hill The Nature of Liabilities I.O.U. Defined as debts or obligations arising from past transactions or events. Maturity = 1 year or less Maturity > 1 year Current Liabilities Noncurrent Liabilities
Slide 10-3 Distinction between Debt and Equity The acquisition of assets is financed from two sources: DEBT EQUITY 0 Funds from creditors. with Funds from a definite due date, and owners sometimes bearing interest Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Slide 10-3 Irwin/McGraw-Hill Distinction Between Debt and Equity The acquisition of assets is financed from two sources: Funds from creditors, with a definite due date, and sometimes bearing interest. Funds from owners DEBT EQUITY
Slide 10-4 Liabilities Question Devon Mfg borrows $100,000 from First Bank. The loan will be repaid in 20 years and has an annual interest rate of 8% Is this a current liability or a noncurrent liability? Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Slide 10-4 Irwin/McGraw-Hill Liabilities Question Devon Mfg. borrows $100,000 from First Bank. The loan will be repaid in 20 years and has an annual interest rate of 8%. Is this a current liability or a noncurrent liability?
Slide 10-5 Liabilities Question Devon Mfg borrows $100,000 from First Bank. The loan will be repaid in 20 years and has an annual interest rate of 8% Is this a current liability or a noncurrent liability? The obligation will not be paid within one year or one operating cycle, so it is a noncurrent liability Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Slide 10-5 Irwin/McGraw-Hill Liabilities Question The obligation will not be paid within one year or one operating cycle, so it is a noncurrent liability. Devon Mfg. borrows $100,000 from First Bank. The loan will be repaid in 20 years and has an annual interest rate of 8%. Is this a current liability or a noncurrent liability?