As of December 31, 2020, Bauman Corporation has prepared the following information regarding its liabilities and other obligations.

20-year bond issue that matures in one year

Accrued interest on the 20-year bond issue as of the balance sheet date

Notes payable, of which 40,000 will be repaid within the next 12 months

Interest expense that will result from existing liabilities over the next 12 months

Cash deposits from customers for goods and services to be delivered over the next four months

Three-year commitment to Peter Smith as chief operating officer at a salary of 150,000 per year

Note payable due within 90 days (but that is approved to be extended for an additional 12 months)

Income taxes, of which 195,000 are currently payable and the remainder deferred indefinitely

800,000 68,000 200,000 92,000 310,000 450,000 190,000 375,000

Lawsuit pending against Bauman, in which 500,000 is claimed in damages. Legal counsel can make no reasonable estimate of the companys ultimate liability at

this time.

Instructions: (1) Define liabilities and distinguish between current and long-term liabilities. (5 points)

(2) Prepare a listing of the Bauman Corporations current and long-term liabilities as they should be presented in the companys December 31, 2020 balance sheet. (15 points)

(3) Explain why you have excluded any of the listed items in your listing of current and long-term liabilities. (10 points) (4) Explain how estimated liabilities, loss contingencies, and commitments are disclosed in financial statements. (5 points)