Section PS 3200 – Liabilities

March 01, 2014

  • There are three essential characteristics of liabilities:
    • They embody a duty or responsibility to others, that leaves a government little or no discretion to avoid settlement of the obligation;
    • The duty or responsibility to others entails settlement by future transfer or use of assets, provision of goods or services, or other form of economic settlement at a specified or determinable date, on the occurrence of a specified event or on demand; and
    • The transactions or events obligating the government have already occurred.
  • Liabilities can arise from many types of obligations, such as:
    • Agreements and contracts;
    • Another government’s legislation;
    • A government’s own legislation;
    • Constructive obligations; and
    • Equitable obligations.
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