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entity b's liabilities as of december 31, 20x1 include the following: accounts payable 500,000 held for trading financial liabilities 1,000,000 note payable (1,000,000 due in 20x3) 2,800,000 unearned revenue 300,000 dividends payable 800,000 deferred tax liability 200,000 compute for the total current liabilities

Question

entity b's liabilities as of december 31, 20x1 include the following: accounts payable 500,000 held for trading financial liabilities 1,000,000 note payable (1,000,000 due in 20x3) 2,800,000 unearned revenue 300,000 dividends payable 800,000 deferred tax liability 200,000 compute for the total current liabilities

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Solution

To compute for the total current liabilities, we need to add up all the liabilities that are due within one year.

From the given data, the following are the current liabilities:

  1. Accounts payable: $500,000
  2. Held for trading financial liabilities: $1,000,000
  3. Unearned revenue: $300,000
  4. Dividends payable: $800,000

The note payable of 2,800,000isnotacurrentliabilitybecauseitisduein20x3,whichismorethanayearaway.Thedeferredtaxliabilityof2,800,000 is not a current liability because it is due in 20x3, which is more than a year away. The deferred tax liability of 200,000 is also not a current liability as it is not due within the next year.

So, to compute the total current liabilities, we add up the four current liabilities:

$500,000 (Accounts payable)

  • $1,000,000 (Held for trading financial liabilities)
  • $300,000 (Unearned revenue)
  • $800,000 (Dividends payable)

= $2,600,000

So, the total current liabilities of entity B as of December 31, 20x1 is $2,600,000.

This problem has been solved

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