Free Critical Thinking About Long Term Liabilities

Long terms liabilities are future obligation for a company that is has to show in its balance sheets and other financial statements. Long term liabitlities are incurred by private organizations, institutions like hospitals, schools and colleges, and the government or its municipal organizations. General liabilities are those activities that funded or financed by a previously announced fund by the government. Since these liabilities have a fund or a announcement of fund behind them, they are categorized as general liabilities. The reason behind this is because there is a fiduciary fund that is there and all the liabilities occurred under this are paid from that fund. This is the reason why these liabilities are also known as fund liabilities. There reported in financial statements of the government organization in Government Activities section. Other long terms liabilities are reported in the balance sheet of the government just like any other business’s balance sheet. They come under long-term debts and would be treated like how a normal company (private enterprise) deals with its long term loans and debts.
According to FASB, all the losses as a result from Uncollectible receivable should be disclosed in the financial statements and a provision should be made for the expected loss as a result from bad debt either through cost recovery system or any other method. GASB 20 which first talked about Proprietary Fund is now superseded and instead FASB requirements should be followed. It also called for deffered Extinguishment of uncollectible fund amount based on expected loss a result of the fund not being released by the authorities.