Liabilities of a Company: Assignment

Added on - 16 Sep 2019

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Ans-1Liabilities of a company is the amount that the company owes to its stakeholders or any other outsider.The liabilities of any company can be distributed in two types, one being the current liabilities and theother one being the non-current liabilities.As can be derived from the name itself current liabilities are the company's debts or any kind ofobligations that are short term in nature means which are due within a year and it also includes short-term debt, accounts payable, accrued liabilities and other debts.After going through the financial statements of the JB Hi-Fi Limited for the financial year 2015-2016specifically the balance sheet, we can conclude that the current liabilities for the JB Hi-Fi limited hasincreasedin the financial year 2015-2016 as compared to the financial year 2014-2015.The current liabilities for JB Hi-Fi Limited has increased by$66497000 (17.48 %)in the financial year2015-2016.There are various classes of liabilities which can be recorded under the head of current liabilities:Accounts PayableInterest PayableAccrued ExpensesTax liabilitiesShort-term LoansDividends DeclaredAns-2The Major liabilities for any company are the one which constitutes of some significant amount, whichafter going through the annual report of JB Hi-Fi limited for the financial year 2015-2016 areTrade and other payables amounting to $384928000 out of which $302141000 is the amount forScreenshot from JB Hi-Fi Limited Annual ReportScreenshot from JB Hi-Fi Limited Annual Report
trade payables only.Borrowings amounting to $109736000 which constitutes of the unsecured bank loan for thesame amount.Ans-3As the name suggests a provision is an amount which a company set aside from its profits to meet somefuture liability or obligation as a result of some past event. As provision is a liability to the company, itcan be both current and non-current liability depending upon the purpose for which the provision hasbeen created.There are various items which are included under the heading ‘Provisions’ in the ‘Current Liabilities’section of the statement of financial position:Provision for bad and doubtful debtsProvision for taxationProvision for discount to debtorsProvision for repairs and renewalsProvision for employee benefitsProvision for loss in the value of stockThe nature of the above-shown items is that all of them are short term in nature, has a contingencyattached to them and will lead to an outflow of the resources.The way in which a provision can be distinguished from a liability is due to the uncertainty regardingthe amount or timing of the future expenditure or some sort of settlement.Yes, the items shown above satisfies the definition of provisions as contained in IAS 37/AASB 137which is,a provision is a "liability of uncertain timing or amount", and requires that all the followingconditions be fulfilled before a provision can be recognized:Presently has a liability as a result of a past event;Outflow of resources is likely to happen to settle the liabilityThe amount of the obligation can be estimated reliably.As can be seen from the screenshot above it can be seen that the liabilities for employee benefits hasincreased by $5288000 in the case of current provisions, whereas by $558000 in the case of Non-current provisions.Ans-4ParticularsFinancial Year2015-16($’000)Financial Year2014-15($’000)Cash raised by interest bearing loans--Interest bearing loans repaid3000040113It was found after going through the annual report for JB Hi-Fi Limited, that all of the unsecuredScreenshot from JB Hi-Fi Limited Annual Report
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