The Criteria for Liability Recognition Include(s)

question 22

Multiple Choice

The criteria for liability recognition include(s) :

• A)the item represents a present obligation, not a potential future commitment or intent.
• B)the obligation must exist as a result of a past transaction or exchange, called the obligating event.
• C)the obligation must require a probable future economic resource that the firm has little or no discretion to avoid.
• D)the obligation must have a relevant measurement attribute that the firm can quantify with sufficient reliability.
• E)All of these answers are correct.

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Definitions:

Deferred Tax Liability

A tax obligation that a company owes but does not have to pay until a future date, usually due to timing differences between accounting practices and tax laws.

Tax Liability

The total amount of taxes owed by an individual, company, or other entity to a taxing authority.

Income Tax Expense

The amount charged against a company's profits due to income taxes, reflecting the cost of complying with jurisdictions' tax laws.

Capital Lease

A lease agreement in which the lessee records the leased asset as if it was purchased with financing, reflecting it on their balance sheet.