Which statement is correct about financial and non-financial liabilities?
A)A non-financial liability is a contractual obligation to deliver cash to another party.
B)A non-financial liability does not meet all of the criteria for a "liability."
C)The two liabilities may be valued differently for financial reporting purposes.
D)A non-financial liability is measured at fair value rather than amortized cost.

Question

Quizplus · Accepted Answer

C is correct because financial and non-financial liabilities can indeed be valued differently for financial reporting purposes. Financial liabilities are often measured at amortized cost or fair value depending on the nature of the liability and the accounting standards applied, while non-financial liabilities, such as provisions for warranties or environmental obligations, may be measured based on the best estimate of the expenditure required to settle the present obligation.

Which Statement Is Correct About Financial and Non-Financial Liabilities