Proper reporting of liabilities on GAAP-based financial statements is crucial to an informed assessment of the financial condition of an enterprise. Overstatement of misclassification of liabilities can result in missed opportunities for financing and artificially low valuations, while liability understatement could result in claims of fraudulent financial reporting. The amount reported as a liability directly affects the equity balances and is therefore a crucial component of the balance sheet. In this course we will identify the potential areas of concern in liability reporting and cover the basic strategies necessary to appropriately reflect those items.
Specifically, the course will help you to:
- Distinguish between debt and equity instruments
- Select the proper classification of liabilities on a classified balance sheet
- Recognize non-debt components such as interest and other current charges
- Identify the proper accounting for debt refinancing
- Determine when a contingent liability must be accrued
- Recognize the appropriate disclosure requirements for a contingent liability