Question

All of the following are criteria that financial reporting requires before recognizing an obligation as a liability except:

a.	The transaction or event that gave rise to the obligation has already occurred.
b.	The firm has a present obligation and little or no discretion to avoid the transfer.
c.	The firm must know the precise amount of the obligation before recording it.
d.	The obligation involves a probable future sacrifice of economic benefits—a future transfer of cash, goods, or services; the forgoing of a future cash receipt; or the transfer of equity shares—at a specified or determinable date. The firm can measure with reasonable precision the cash-equivalent value of the resources needed to satisfy the obligation.

Answer 1

d.

The obligation involves a probable future sacrifice of economic benefits—a future transfer of cash, goods, or services; the forgoing of a future cash receipt; or the transfer of equity shares—at a specified or determinable date. The firm can measure with reasonable precision the cash-equivalent value of the resources needed to satisfy the obligation.