AFM391 Chapter Notes - Chapter 13: Interest Bearing Note, Current Liability, Accounts Payable

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A liability is an obligation that arises from past transactions or events, which may result in a transfer of assets or provision of services. This is according to current ifrs and cica handbook definitions. The entity has little or no discretion to avoid the duty. The transaction or event that obliges the entity has occurred. Economic obligations can be enforced by laws and contracts or through past practices. Constructive obligation arises when past or present company practice shows that the entity acknowledges a potential economic burden. Non-financial liabilities are recognized only if it is probable - more likely than not - that the obligation would result in an outflow of cash or other economic resources from the entity. Liabilities that are not created by contracts such as income taxes payable (created through legislations) are considered non-financial liabilities. No specific guideline, and different liabilities are measured in a variety of ways.

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