Hi There !
Non current debt should be included in the current section of the statement of financial position if
A. Management plans to refinance it within the year.
B. It matures within the year and will be retired through the use of current assets. C. A bond retirement fund has been set up for use in its scheduled retirement during the next year.
D. It is to be converted into common stock before maturity.
The answer is B.
Explaination;
Current liabilities include those obligations that are expected to be satisfied by the (1) payment of cash, (2) use of current assets other than cash, or (3) creation of new current liabilities within 1 year from the balance sheet date (or operating cycle, if longer).
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Rhiens Racoma
Accountant Assistant / Payroll Officer
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Original Message:
Sent: 08-08-2020 12:02 PM
From: Adham Mourad
Subject: Unit 1 Question
Hello,
As to add more on Tolulope Olajide explanation, Option (A) is not correct because, when management plans or intends to refinance a debt and demonstrates the ability to do so by entering into a refinancing agreement before balance sheet is issued, it means a short-term debt will be reclassified as non-current debt.
Further more, Current liabilities include those obligations that are expected to be satisfied by the (1) payment of cash, (2) use of current assets other than cash, or (3) creation of new current liabilities within 1 year from the balance sheet date (or operating cycle, if longer).
Hope it helps.
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Adham Mourad
Accountant
Doha
Qatar
Original Message:
Sent: 08-07-2020 12:47 PM
From: Asmaa Mohamed Salah Mahmoud Mostafa
Subject: Unit 1 Question
Hello everyone can anyone help me understanding this Question ( An easy and simple way please )
Non current debt should be included in the current section of the statement of financial position if
A. Management plans to refinance it within the year.
B. It matures within the year and will be retired through the use of current assets.
C. A bond retirement fund has been set up for use in its scheduled retirement during the next year.
D. It is to be converted into common stock before maturity.
The answer is B
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Asmaa Mohamed
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