ACTG 3120 Lecture Notes - Lecture 1: Financial Instrument, Capital Asset, Equity Method

• School: York University
• Department: Accounting
• Course: ACTG 3120
• Professor: Elizabeth Farrell

Document Summary

Constructive obligation: public statement that public expects will honor certain responsibilities in the future. Different from legal obligation because no law enforced. Financial instrument: any contract that gives rise to financial asset of one party and a financial liability or equity instrument another party. Financial liabilities: contract that gives rise to a financial liability and a financial asset to another party. Choice between using other liabilities or fvtpl. Other liabilities- use amortized costs with effective interest method ex. Bonds: fv of consideration received + transaction costs, if over a period of time pv of market interest rate reflective of risk& term, if don"t use fvtpl use this method. Fvtpl- use fair value method , expense transaction costs: fv changes into net income, required to use for derivatives. Derivatives ( can choose to elect hedge accounting) Asset retirement, unearned revenue, provision or warranty liability. Changes in estimate prospectively (don"t care about past)