Question: Why is a present commitment to purchase an asset in the future not recorded as a liability?

Why is a present commitment to purchase an asset in the future not recorded as a liability?

Step by Step Solution

★★★★★

3.39 Rating (152 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

The transaction does not meet the definition of a liability A liab... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

1207-B-C-A-A-R(456).docx

120 KBs Word File

Students Have Also Explored These Related Cost Accounting Questions!

Q:

Valdez Company has a required rate of return of 12%. The Company has an investment opportunity to purchase an asset that costs $171,654.05. The asset is expected to have a 5 year useful life and is...

Q:

A forward contract is a contract to purchase an asset at a fixed price on a particular date in the future. Both parties are obligated to fulfill the contract. Explain how to construct a forward...

Q:

Schuyler Company wishes to purchase an asset costing $117,000. The full amount needed to finance the asset can be borrowed at 14% interest. The terms of the loan require equal end-of-year payments...

Q:

? * * 1 2 . ( LO 3 , 5 ) AP During the first week of May 2 0 2 4 , Emily Marquette worked 3 5 hours at an hourly wage of $ 2 9 . 5 0 per hour for an employer in Ontario. Using the payroll deduction...

Q:

Q.1 Write reply for this artices The logic of debiting and crediting is related to the accounting equation, which is expressed as "Assets = Liabilities + Owner's Equity." Accounting is based on the...

Q:

To determine the present value of any future amount, you need to know O the future amount to be received, the interest rate, and the hurdle rate. O when the future amount will be received, the future...

Q:

All of the following are definitely determinable liabilities except O current maturities of long-term debt. operating lines of credit. a future commitment to purchase an asset. O accounts payable

Q:

Question 5 ( 1 point ) Listen All of the following are definitely determinable liabilities EXCEPT current maturities of long - term debt. operating lines of credit. a future commitment to purchase an...

Q:

Question 1 (1 point) Employer payroll costs will include both the gross wages of employees plus the employer costs of benefits. True False Question 2 (1 point) . Warranty liabilities are estimated...

Q:

Question 5 ( 1 point ) Listen All of the following are definitely determinable liabilities EXCEPT current maturities of long - term debt. operating lines of credit. a future commitment to purchase an...

Q:

California Cement Company anticipates the following fourth-quarter sales for 2009: $1,800,000 (October), $1,600,000 (November), and $2,100,000 (December). It posted the following sales figures for...

Q:

How is it possible to merge a collection of relations that is in third normal form into a cumulative design that is in third normal form but not obtain a collection of relations that is in third...

Q:

Clarissa is a contingent beneficiary for a life insurance policy. When both the insured and the primary beneficiaryare killed in a car crash, the insurance company pays the proceeds t Lee, who has...

Q:

If smoking generates external costs, should smoking simply be outlawed? How about cars that pollute? LO1

Q:

Natalie is busy establishing both divisions of her business (cookie classes and mixer sales) and completing her business diploma. Her goals for the next 11 months are to sell one mixer per month and...

Q:

Refer to the financial statements and Notes to Consolidated Financial Statements for Reitmans (Canada) Limited in Appendix A. Instructions (a) How does Reitmans value its inventory? (b) Which...

Q:

Headquartered in Toronto, Indigo Books & Music Inc. (TSX: IDG) is Canada's largest book retailer and the third largest in North America. Th e following information was taken from the management...

Q:

Kidder Corporation's balance sheet shows an historical book value for long-term debt (bonds, at par) of $23,500,000. The bonds have an 6.4% coupon rate, payable semiannually, and a par value of...

Q:

Question 1 Shinoda Corp, has 9.34 percent coupon bonds making annual payments with a YTM of 6.71 percent. The current yield on these bonds is 7.63 percent. How many years do these bonds have left...

Q:

Best Co. has 100 million common shares outstanding currently selling for $40/share. It has a dividend yield of 3% (hint: dividend yield is calculated as dividends paid in the last 12 months divided...