(Determining whether certain economic events are liabilities, LO 1) Explain whether each of the following would be considered a liability according to GAAP

(using the three criteria from the chapter) on December 31, 2005. Intuitively, would you consider each of these items an obligation, regardless of how it is accounted for according to GAAP? Explain.

a. Interest on a bank loan outstanding on December 31, 2005. Interest is not payable until the loan must be repaid on September 30, 2006.

b. A $1,000,000 loan from a shareholder that bears no interest and has no scheduled repayment date.

c. The cost of closing a landfill when it is full. Significant costs will have to be incurred to ensure that it meets government standards. The landfill is expected to close in 15 years.