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Section PS 3200 - Liabilities

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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