---
title: "ACCT 101, Session 7: Liabilities; Sustainability Reporting"
author: 
  - name: Dr. Richard M. Crowley
    email: rcrowley@smu.edu.sg
    affiliation: https://rmc.link/
title-slide-attributes:
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editor: source
---

# Front matter {data-background-video="../Backgrounds/section.mp4" data-background-video-loop="true"}


<!--# Note that the downlit and xml2 pacakges are required to compile -->
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```{r helpers, echo=FALSE, warning=FALSE, message=F}
library(knitr)
library(kableExtra)

#' Pretty formatted HTML tables
#' 
#' @param df The dataframe to format as a table
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#' @param full Use to span the full width of a slide. FALSE by default.
#' @param fixed_header Whether the first row should be treated as a header row. TRUE by default.
html_df <- function(df, names=NULL, highlight_cols=c(1), highlight_rows=c(), color_rows=c(), highlight_end_rows=c(), full=F, fixed_header=T) {
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  kbl(df,"html", col.names = names, align = c("l",rep('c',length(cols)-1))) %>%
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}

library(tidyverse)
```

<!--# List packages here that are not being correctly highlighted -->
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```{r}
#| include: false
options(downlit.attached = c("knitr", "kableExtra", "tidyverse"))
```

<!-- "reveal_plugins:..." and "chalkboard:" are handled by prep.py -->
```{r setup, include=FALSE}
library(reticulate)  # To use python in R Markdown
# Python to use is specified in the .Renviron file
```

## Group project {data-background="../Backgrounds/people.jpg" class="present-only"}

> Record your group preferences at https://rmc.link/101groupsG_

- The form asks for your preference of up to 2 classmates to work with
- If you both choose each other, you are highly likely to be allocated to the same group
- Groups of 4-5 will be constructed based on your preferences
    - Based on a **game theory** algorithm for fair group allocation

> Timeline

- Project groups will be announced by tomorrow at 7 PM
- At the same time, I will release a form for selecting your project choices
    - Look for the announcement on eLearn!



## Learning objectives {data-background="../Backgrounds/default.jpg"}

:::: {.columns}

::: {.column width="50%"}
![](../Course_Diagrams/ACCT_101_course_map_7.png){width="450px" fig-align="center"}
:::

::: {.column width="50%"}

Current liabilities (Chapter 8)

1. Account for current liabilities
2. Become familiar with "time value of money"
    - We'll need this for Bonds

Sustainability reporting

1. Understand the components of a sustainability report
2. Recognize challenges and benefits of sustainability reports
3. Identify sustainability as a core business value

:::

::::





# Current Liabilities {data-background-video="../Backgrounds/section.mp4" data-background-video-loop="true"}

## Review of liabilities {data-background="../Backgrounds/default.jpg"}

> Obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. (FRS 37:10)

- Current liability: Something you owe within the span of one year (the current accounting term)
- Non-Current liability: Something you owe after the current accounting term

> Example current liabilities: Accounts payable, Unearned revenue, Salaries payable, Taxes payable, Notes payable, Interest payable, ________ payable

## Sales tax payable {data-background="../Backgrounds/default.jpg"}


:::: {.columns}

::: {.column width="50%"}

- Also known as GST
- Generally paid quarterly
    - Can pay monthly as well
- Retailers collect this from customers to pass to tax authorities (IRAS)

:::

::: {.column width="50%"}

![](../Figures/iras.png){width="150px" fig-align="center"}

:::

::::

![](../Diagrams/JE_7-3.png){width="800px" fig-align="center" .lightbox}


## Notes payable {data-background="../Backgrounds/default.jpg"}

:::: {.columns}

::: {.column width="50%"}

- Notes payable is a small, short-term loan
- Similar to A/P, but:
    + More formal
    + Has a stated interest rate
- Can be provided by any party
    + Banks
    + Suppliers

:::

::: {.column width="50%"}

![](../Figures/Note.jpg){width="600px" fig-align="center"}

:::

::::

> This is included in Chapter 5 in the book

## Notes payable terms {data-background="../Backgrounds/default.jpg"}

- *Creditor*: the lender
- *Debtor*: the party that owes money
- *Term*: length of time of the note
- *Maturity date*: when the note is due
- *Principal*: amount of money borrowed
    - We'll record this at the start
- *Interest*: additional payments for borrowing
    - We'll record these as they occur
        - Or when doing adjusting entries
- *Maturity value*: amount owed at maturity
- Interest is usually all paid at the end
    - The interest rate will be given as the *annual* rate

## Notes payable debtor {data-background="../Backgrounds/default.jpg"}

> Received a $2,000 note payable with 9% interest due in 3 months payable to our supplier.

![](../Diagrams/JE_7-5.png){width="800px" fig-align="center" .lightbox}

## The other side: Notes receivable {data-background="../Backgrounds/default.jpg"}

> Gave $2,000 with 9% interest due in 3 months payable to our customer as a note receivable.

![](../Diagrams/JE_7-6.png){width="800px" fig-align="center" .lightbox}

## Current long term debt {data-background="../Backgrounds/default.jpg"}

- We consider any payment owed in the coming fiscal year as a current liability
    - This includes payments on long term debt
- We shift these payments to short term debt when we do our balance sheet
    - Call it "current portion of long term debt"

![](../Diagrams/Current_portion_LTD.png){width="700px" fig-align="center"}

## Check {data-background="../Backgrounds/question1.jpg"}

> Coffee Co. gives $1,000 to Latte Inc. on November 1st, 20X8 as a note with 6% interest over 6 months.  Record the journal entries for *both companies*, i.e., the note receivable and the note payable. Assume December 31st is both companies' fiscal year end.

>- Hints:
>     - Money changes hands on November 1
>     - Interest accrues on December 31
>     - The note is paid back on April 30th

## {data-background="../Backgrounds/graph_paper.png" class="print-only"}

## Check: Note payable {data-background="../Backgrounds/answer.jpg" class="default exclude"}

![](../Diagrams/JE_7-P1.png){width="800px" fig-align="center" .lightbox}

## Check: Note receivable {data-background="../Backgrounds/answer.jpg" class="default exclude"}

![](../Diagrams/JE_7-P2.png){width="800px" fig-align="center" .lightbox}

# Time value of money {data-background-video="../Backgrounds/section.mp4" data-background-video-loop="true"}

## What's a dollar worth? {data-background-image="../Backgrounds/hershey.jpg" class="present-only"}

>- Everyone should have 1 card: write your name on it
>- If you give me the card during the next break, I'll give you 1 chocolate
>- If you give me the card at the end of class, I'll give you 2 chocolates
>- Which do you prefer?
>- What if it was 2 now and 1 later?
>- What if it was 1 now and 1 later?
>- How many chocolates would you need later to not take one now? (Decimals are fine)
>- <span style="color:blue">We'll do 1 now or 2 later</span>

## Source {data-background-image="../Backgrounds/books.jpg"}

<div class="alignleft">
This section is based on:

**Corporate Finance: An Introduction**

by Ivo Welch

Pearson: Boston, MA. 2009.
</div>

> It's a good finance textbook!

## The perfect market {data-background="../Backgrounds/default.jpg"}

- No taxes
- No transaction costs
    - Can find buyers/sellers costlessly
    - Can deliver costlessly
- Everyone has identical beliefs
- Many buyers and sellers (liquid)

> We'll use these assumptions in this class

## Basic perspectives: Why we have *time value of money* {data-background="../Backgrounds/default.jpg"}

1. You can earn interest on \$1 today, so it's worth more than $1 tomorrow.
2. Inflation means that \$1 tomorrow can buy less than \$1 today.
3. \$1 today gives me the option to spend today or tomorrow, but \$1 tomorrow can only be spent tomorrow.  If that option to use the \$1 today is valuable to me, \$1 today is worth more than \$1 tomorrow.

> All three of these are equivalent: a dollar today is worth more than a dollar tomorrow

## Consequences {data-background="../Backgrounds/default.jpg"}

- When we talk about returns, we'll talk about *compounded* returns
    - If \$1 today is \$1.10 next year...
        - then \$1.00 in two years is \$1.21, not \$1.20
            - Return scales with capital
- More explicitly: if the interest rate, $r$ is 10%, and the principal, $P_0$ is \$1, then:
    - Tomorrow $P_0$ is worth $P_1=P_0\cdot (1+r) = 1\cdot 1.10 = 1.10$
    - Flipping the equation implies: $P_0 = \frac{P_1}{(1+r)} = \frac{1.10}{1.1} = 1$

## Extension: Going forward {data-background="../Backgrounds/default.jpg"}

- What is $1 worth in two years?  Three years? ...
    - $P_2 = \left(1\cdot 1.1\right)\cdot 1.1 = 1.21$
    - $P_3 = \left(\left(1\cdot 1.1\right)\cdot 1.1\right)\cdot 1.1 = 1.331$
    - $\ldots$
    - $P_{50} = \left(\ldots \left(1\cdot 1.1\right)\cdot 1.1\ldots\right)\cdot 1.1 \approx 106.72$
    - $\ldots$
    - $P_n = P_0\cdot (1+r)^n$

## Extension: Going forward {data-background="../Backgrounds/default.jpg"}

```{r pander, echo=FALSE, warning=FALSE}
suppressPackageStartupMessages(library(plotly))
m <- list(
  l = 60,
  r = 50,
  b = 60,
  t = 100,
  pad = 4
)
a <- 0:50
b <- 1.1^(0:50)
df <- data.frame(Year=a,Value=b)
plot_ly(df, x=~Year, y=~Value, type="scatter", mode="markers", name="Cash flows", width = 800, height = 500) %>%
  layout(autosize = F, margin = m, title = "Future value of a dollar", xaxis=list(title="Year",rangemode="tozero"), yaxis=list(title="Value of $1", range=c(0,120)))
```

## Extension: Going backward {data-background="../Backgrounds/default.jpg"}

- What is the current value of \$1 in two years?  Three years? ...
    - $P_0'' = \left(1/1.1\right)/1.1 = 0.83$
    - $P_0''' = \left(\left(1/1.1\right)/1.1\right)/1.1 = 0.75$
    - $\ldots$
    - $P_0^{(50)} = \left(\ldots\left(1/ 1.1\right)/ 1.1\ldots\right)/ 1.1 \approx 0.0085$
    - $\ldots$
    - $P_0^{(n)} = \frac{P_n}{(1+r)^n}$

## Extension: Going backward {data-background="../Backgrounds/default.jpg"}

```{r pander2, echo=FALSE, warning=FALSE}
suppressPackageStartupMessages(library(plotly))
m <- list(
  l = 60,
  r = 50,
  b = 60,
  t = 100,
  pad = 4
)
a <- 0:50
b <- 1/1.1^(0:50)
df <- data.frame(Year=a,Value=b)
df <- data.frame(Year=a,Value=b)
plot_ly(df, x=~Year, y=~Value, type="scatter", mode="markers", name="Cash flows", width = 800, height = 500) %>%
  layout(autosize = F, margin = m, title = "Present of a future dollar", xaxis=list(title="Year",rangemode="tozero"), yaxis=list(title="Value of $1", range=c(0,1.2)))
```

## Check {data-background="../Backgrounds/question1.jpg"}

<ol>
<li style="margin-bottom:3em"> What is \$10 worth in 20 years, if the interest rate is 5\%?
<li style="margin-bottom:3em"> What is \$10 received 20 years from now worth today, if the interest rate is 5\%?
</ol>



Answers:

>1. $10\times (1+0.05)^{20}=\$26.53$
>2. $\frac{10}{(1+0.05)^{20}}=\$3.76$

# Net Present Value {data-background-video="../Backgrounds/section.mp4" data-background-video-loop="true"}

## What is Net Present Value? (NPV) {data-background="../Backgrounds/default.jpg"}

- What we just did!
- Determine the price *today* of some future (expected) cash flows
- Numerator is the future cash flow, $CF$
- Denominator is the *discount factor*, $R$
    - That is, we discount cash flows by the return to get today's value

$$
NPV_0 = CF / R
$$

- What if there are multiple cash flows?

> $NPV_0 = \sum_{i=0}^{n} \frac{CF_i}{R_i}$

> NPV at time 0 (today) is the sum of all discounted cash flows

## Discount factors {data-background="../Backgrounds/default.jpg"}

- The discount factor is the amount of *cumulated* return or interest you would expect to receive between two period of time.
- We often assume a fixed discount rate for each year of $1+r$
- Let $R_i$ denote the discount factor from time $0$ to time $i$
    - $R_1=1+r$
    - $R_2=(1+r)\cdot(1+r)$
    - $R_3=(1+r)\cdot(1+r)\cdot(1+r)$
    - $\ldots$
    - $R_n=(1+r)^n$

## Simple Example {data-background="../Backgrounds/default.jpg"}

- A project costs \$500 today, and is expected to pay out the following:
    - \$100 in one year
    - \$600 in two years.
- If the interest rate is 10\%, what is the NPV of the project?<br><br>

>- $NPV = \frac{-500}{(1+0.1)^0} + \frac{100}{(1+0.1)^1} + \frac{600}{(1+0.1)^2}$
>- $NPV = -500 + 90.91 + 495.87$
>- $NPV = 86.78$
>- What if the interest rate was 5%?
>- $NPV = \frac{-500}{(1+0.05)^0} + \frac{100}{(1+0.05)^1} + \frac{600}{(1+0.05)^2}$
>- $NPV = -500 + 95.24 + 544.22$
>- $NPV = 139.46$


## Calculating {data-background="../Backgrounds/default.jpg"}

```{r npv1, echo=FALSE, warning=FALSE}
suppressPackageStartupMessages(library(plotly))

m <- list(
  l = 60,
  r = 50,
  b = 60,
  t = 100,
  pad = 4
)

a <- 1:100
b <- c(100/1.01^(1:100))
df <- data.frame(Year=a,Value=b)
v <- sum(df$Value)
```

- Easy to do a few cash flows with a calculator
- Easy to do any number of cash flows with spreadsheets
- What is the NPV of a project that pays out \$100 each year for 100 years, assuming the interest rate is 1%?
    - Value is `r v`


```{r npv3, echo=FALSE, warning=FALSE}
plot_ly(df, x=~Year, y=~Value, type="scatter", mode="markers", name="Cash flows", width = 800, height = 400) %>%
  layout(autosize = F, margin = m, title = "Cash flows per year", xaxis=list(title="Year",rangemode="tozero"), yaxis=list(title="Discounted cash flow", range=c(0,100)))
```

## What about for... {data-background="../Backgrounds/code.jpg"}

- 10 years?  100 years? 1,000 years? 10,000 years?
- Pretty hard by hand
- Trivial to brute force on a computer

```{r}
NPV <- data.frame(Years=c(10, 100, 1000, 10000),
                  NPVs=c(sum(c(100/1.01^(1:10))),
                         sum(c(100/1.01^(1:100))),
                         sum(c(100/1.01^(1:1000))),
                         sum(c(100/1.01^(1:10000)))))
html_df(NPV)
```

## What about by hand? {data-background="../Backgrounds/reference.jpg"}

> Formulas!  

- Perpetuity: The same cash flow and discount rate forever:
    - $Perpetuity~NPV = \frac{CF}{r}$
- Growing perpetuity: perpetuity but with a growth in cash flows of $g$:
    - $GP~NPV = \frac{CF}{r-g}, g<r$
- *Annuity*: same cash and discount rate for only $T$ periods
    - $Annuity~NPV = \frac{CF}{r}\left[1-\frac{1}{(1+r)^T}\right]$

> *We'll need this annuity NPV formula next class*

## Revisiting the 10,000 figures {data-background="../Backgrounds/default.jpg"}

$$\begin{align*}
NPV &= \frac{100}{0.01} \cdot \left[1-\frac{1}{(1+0.01)^{10,000}}\right] \\
&\approx 10,000 \cdot 1 \\
&\approx 10,000 \\
\end{align*}$$

>- What about for 70 periods?
>     - $NPV = \frac{100}{0.01} \cdot \left[1-\frac{1}{(1+0.01)^{70}}\right]$
>     - $NPV = 5,016.85$

## The last formula... {data-background="../Backgrounds/default.jpg"}

> A note to those in finance, from the textbook: "I am not a fan of memorization, but you must remember the growing perpetuity formula. It would likely be useful if you could also remember the annuity formula.  These formulas are used in many different contexts.  There is also a fourth formula, which nobody remembers, but which you should know to look up if you need it." (p53)

- Growing annuity

$PV = \frac{C}{r-g} \left[1 - \frac{(1+g)^T}{(1+r)^T}\right], g<r$

## Derivation -- for those interested in the math {data-background="../Backgrounds/default.jpg"}

You can derive the other 3 formulas from the fourth:

- Growing perpetuity:
    - $\lim_{T\rightarrow\infty} \frac{CF}{r-g} \left[1 - \frac{(1+g)^T}{(1+r)^T}\right] = \frac{CF}{r-g} \left[1 - 0\right] = \frac{CF}{r-g}$
- Annuity:
    - $\left.\frac{C}{r-g} \left[1 - \frac{(1+g)^T}{(1+r)^T}\right]\right|_{g=0} = \frac{C}{r} \left[1 - \frac{1}{(1+r)^T}\right]$
- Perpetuity
    - $\left.\lim_{T\rightarrow\infty} \frac{CF}{r-g} \left[1 - \frac{(1+g)^T}{(1+r)^T}\right]\right|_{g=0} = \frac{CF}{r-0} \left[1 - 0\right] = \frac{CF}{r}$

> You don't need to know this for this class

## In class work {data-background="../Backgrounds/group.jpg"}

1. An investment costs \$100 today, and pays out $10 per year for the next 10 years.  In the 10th year, it also pays back the original \$100.  If the interest rate is 10%, what is the NPV?
2. What if the interest rate was 8% instead of 10% in #1?

## {data-background="../Backgrounds/graph_paper.png" class="print-only"}

## Question 1 {data-background="../Backgrounds/answer.jpg" class="default exclude"}

> An investment costs \$100 today, and pays out $10 per year for the next 10 years.  In the 10th year, it also pays back the original \$100.  If the interest rate is 10%, what is the NPV?

## Question 1 {data-background="../Backgrounds/answer.jpg" class="default exclude"}

> An investment costs \$100 today, and pays out $10 per year for the next 10 years.  In the 10th year, it also pays back the original \$100.  If the interest rate is 10%, what is the NPV?

$$\begin{align*}
NPV &= -100 + \sum_{i=1}^{10} \frac{10}{(1+0.1)^i} + \frac{100}{(1+0.1)^{10}} \\
&= -100 + \frac{10}{0.1}\left[1-\frac{1}{(1+0.1)^{10}}\right] + \frac{100}{(1+0.1)^{10}} \\
&= -100 + 61.45 + 38.55\\
&=0
\end{align*}$$

> Use NPV and the *annuity* formula!

## Question 2 {data-background="../Backgrounds/answer.jpg" class="default exclude"}

- An investment costs \$100 today, and pays out $10 per year for the next 10 years.  In the 10th year, it also pays back the original \$100.  If the interest rate is 10%, what is the NPV?
    - The NPV would be 0.

> What if the interest rate was 8%?

## Question 2 {data-background="../Backgrounds/answer.jpg" class="default exclude"}

> What if the interest rate was 8%?

$$\begin{align*}
NPV &= -100 + \sum_{i=1}^{10} \frac{10}{(1+0.08)^i} + \frac{100}{(1+0.08)^{10}} \\
&= -100 + \frac{10}{0.08}\left[1-\frac{1}{(1+0.08)^{10}}\right] + \frac{100}{(1+0.08)^{10}} \\
&\approx -100 + 67.10 + 46.32\\
&\approx 13.42
\end{align*}$$

> Use NPV and the *annuity* formula!


## Stock markets {data-background="../Backgrounds/question1.jpg"}

- Are stock prices NPVs?

## Stockmarkets are not perfect {data-background="../Backgrounds/answer.jpg" class="default exclude"}

- <span style="color:red">No taxes</span>
- <span style="color:red">No transaction costs</span>
    - <span style="color:green">Can find buyers/sellers costlessly</span>
    - <span style="color:red">Can deliver costlessly</span>
- <span style="color:red">Everyone has identical beliefs</span>
- <span style="color:blue">Many buyers and sellers (liquid)</span>



# Sustainability {data-background-video="../Backgrounds/section.mp4" data-background-video-loop="true"}

## CSR or ESG? {data-background="../Backgrounds/ESG.png"}

:::: {.columns}

::: {.column width="50%"}
**CSR**

- *C*orporate *S*ocial *R*esponsibility
- The precursor to ESG


**ESG**

- *E*nvironmental, *S*ocial, & *G*overnance
- Blends governance, CSR, and a broader focus on climate and its risks

**ESD**

- *E*ducation for *S*ustainable *D*evelopment
- [Up]Skilling future leaders

:::

::: {.column width="50%"}

**ESD: UNESCO**

ESD is a lifelong learning process and an integral part of quality education. It enhances the cognitive, socio-emotional and behavioural dimensions of learning and encompasses learning content and outcomes, pedagogy and the learning environment itself. 

:::

::::

## The three pillars of ESG {data-background="../Backgrounds/ESG.png" .small}

> **E**nvironmental

- Climate change, effluents and waste, clean energy, energy consumption, carbon emissions, biodiversity degradation, water, ...

> **S**ocial

- Diversity, human rights, everyone’s health & safety, child & enforced labour, product responsibility, anti-corruption, ...

> **G**overnance

- Management structure, employee relations, executive compensation, Board diversity, ethical culture, Board and management competence


::: {.callout-tip}
## TCFD

The above comes from the Task Force on Climate-related Financial Disclosures (TCFD)

:::


## Can ESG disclosure mislead? {data-background="../Backgrounds/ESG.png"}

:::: {.columns}

::: {.column width="50%"}

![](../Figures/VZ_youtube.png){height="650px" fig-align="center"}

:::

::: {.column width="50%"}
![](../Figures/Verizon_VZ1.png){height="650px" fig-align="center"}
:::

::::

## Can ESG disclosure mislead? {data-background="../Backgrounds/ESG.png"}

:::: {.columns}

::: {.column width="50%"}

**Before the video**

![](../Figures/Verizon_Ars_original.png){height="550px" fig-align="center"}

:::

::: {.column width="50%"}

**After the video**

![](../Figures/Verizon_Ars.png){height="550px" fig-align="center"}

:::

::::


## How firms should act {data-background="../Backgrounds/ESG.png"}

:::: {.columns}

::: {.column width="50%"}

1. Guided by strong *moral* and *ethical* standards in daily interactions with **all** stakeholders
2. Carefully balance *shareholders'* needs with the needs of **other stakeholders**
3. Constantly consider the **environmental impact** of its business operations


:::

::: {.column width="50%"}
![](../Figures/Nexus.png){width="600px" fig-align="center"}
:::

::::

## U.N. SGDs {data-background="../Backgrounds/ESG.png"}

<iframe width="1200" height="675" src="https://www.youtube.com/embed/cBxN9E5f7pc?si=05b7NEC1fhqjnOfW" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>

## U.N. SDGs {data-background="../Backgrounds/ESG.png"}

![](../Figures/S7_SDG.jpg){width="1200px" fig-align="center"}


# Sustainability reporting {data-background-video="../Backgrounds/section.mp4" data-background-video-loop="true"}

## What must be reported? {data-background="../Backgrounds/ESG.png" .small}

::: {.callout-note}
## Factors to consider

What needs to be reported often varies by jurisdiction, company size, ownership structure, and industry. In Singapore, rules are determined by [SGX](https://www.sgx.com/sustainable-finance/sustainability-reporting)

:::

- In Singapore, the following must be reported by *public* companies:
    - Starting FY 2025: Greenhouse gas emissions from their own or controlled operations (*Scope 1*)
    - Starting FY 2026: Greenhouse gas emissions from purchasing electricity, heat, or steam (*Scope 2*)
    - Starting FY 2027: Greenhouse gas emissions from the rest of their supply chain (*Scope 3*)
    - Starting FY 2027: Scope 1 and 2 need an audit
- For large private firms:
    - Scope 1 and 2 disclosure by 2027, Scope 3 by 2029
    - Audit of scope 1 and 2 by 2029

> Material risks must be disclosed already

## Materiality and ESG {data-background="../Backgrounds/ESG.png"}

Materiality goes two ways

:::: {.columns}

::: {.column width="50%"}

Company $\Rightarrow$ World

- What is the impact of the firm on...
    - The local environment
    - Climate
    - Nearby communities
- What risks does the company's actions pose on the environment and local communities?

:::

::: {.column width="50%"}

World $\Rightarrow$ Company

What environmental risks does the company face?
Does climate change pose a risk for the company's operations?

:::

::::

## Reporting frameworks {data-background="../Backgrounds/ESG.png"}

![](../Figures/ESG_frameworks.png){width="1200px" fig-align="center"}

::: {.callout-important}
## Singapore

SGX' reporting choices are generally in line with TCFD

:::

## TCFD reporting {data-background="../Backgrounds/ESG.png"}

![](../Figures/TCFD_summary.png){width="1200px" fig-align="center"}

## Risks and Opportunities: Company to World {data-background="../Backgrounds/question.jpg"}

- Consider the following companies:
    1. A Norwegian lumber producer
    2. A Singaporean airline
    3. 

## Risks and Opportunities: World to Company {data-background="../Backgrounds/question.jpg"}

- Consider the following companies:
    1. A Norwegian lumber producer
    2. A Singaporean airline
    3. 


## TCFD: The Game {data-background="../Backgrounds/group.jpg"}

- We will divide into 9 groups
- Each group needs to pick 1 of the 6 provided company cards

> The task

1. Determine the key risks this firm faces (top 6)
2. Determine the best solution for each of the risks (choose 6 of 16 actions)
3. I will pull 6 event cards, and we will see how your company performs



## Additional information for Singapore {data-background="../Backgrounds/reference.jpg"}

- You can find more details on sustainability in Singapore at this links:
    - [NEA: Climate Change](https://www.nea.gov.sg/our-services/climate-change-energy-efficiency/climate-change/overview)
    - [Green Plan 2030](https://www.greenplan.gov.sg/)
    - [Reduce, Reuse and Recycle](https://www.gov.sg/article/how-to-practise-the-3rs)
    - [Ministry of Sustainability and the Environment](https://www.mse.gov.sg/)


# End matter {data-background-video="../Backgrounds/section.mp4" data-background-video-loop="true"}

## Wrap up {data-background="../Backgrounds/ending.jpg"}

- For next week
    1) Recap the reading for this week
    2) Read the pages for next week
        - Liabilities (Chapter 9)
    3) Submit last week's homework
        - Available on eLearn
        - Submit on eLearn
    4) Practice on eLearn
        - Practice on Time value of money
        - Automatic feedback provided
- Survey on the class session at [rmc.link/101survey7](https://docs.google.com/forms/d/e/1FAIpQLSdzyohx5MTN40nrDxCWRfuyapH7b1N6NG6MQqV6-lMMNT9z2Q/viewform?usp=sf_link)

## Packages used for these slides {data-background="../Backgrounds/code.jpg"}

- `{kableExtra}`
- `{knitr}`
- `{revealjs}`




## References {data-background="../Backgrounds/books-old.jpg" .never .small visibility="hidden"}

## Custom code {data-background="../Backgrounds/code.jpg" .never .small visibility="hidden"}


## NOTES {class="never" visibility="hidden"}



# Estimated liabilities {data-background="../Backgrounds/section.jpg" class="header" .never visibility="hidden"}

## Provision for warranty repairs {data-background="../Backgrounds/default.jpg" class="default" .never visibility="hidden"}

- Manufacturers need to factor in liabilities from warranties
- Estimate this *provision for warranty repairs* at year end

![](../Diagrams/JE_7-7.png){width="800px" fig-align="center" .lightbox}


## What does contingent mean? {data-background="../Backgrounds/default.jpg" class="default" .never visibility="hidden"}

- Contingent liabilities are not presently liabilities, but could become liabilities in the future.
- Listed in the financial statement notes, but not journalized
- To note all 3 must be true:
    1. Must depend on a future outcome of past events
    2. May, *but probably will not*, require an outflow of resources
    3. Must not have a sufficiently reliable estimate of the amount owed.

> Contingent liabilities are obligations you might or might not have

## Recognizing liabilities {data-background="../Backgrounds/default.jpg" class="default" .never visibility="hidden"}

- If chance of owing is very low
    - Ignore
- If chance is reasonably possible
    - *Contingent liability* $\Rightarrow$ Make a note to your financial statements, but don't include it in the statements themselves
- If a sufficiently reliable estimation can be made
    - This is a *real liability* $\Rightarrow$ Include it in your adjusting entries
        - Not as a contingent liability
    - Ex.:
        - Provision for warranty repairs