Question

How a short term loan can be reported on the balance sheet of 31 December of...

How a short term loan can be reported on the balance sheet of 31 December of 20XX if the loan is extended and becomes long term

a)Before 31th December of 20XX

b)After January of the new year (after the balance sheet)

Homework Answers

Answer #1

a) Before 31th December of 20XX

If a short term loan is extended and becomes long term before 31th December of 20XX i.e. before balance sheet date then portion of loan which is to be paid in the next 12 months is to be shown as Short term portion of loan under the head "Current Liability" and portion of loan which is to be paid beyond 12 months is to be shown as Long term portion of loan under the head "Non Current Liability"

b) After January of the new year (after the balance sheet)

If a short term loan is extended and becomes long term after 31th December of 20XX i.e. after balance sheet date then whole amount of loan is to be shown as Short term portion loan under the head "Current Liability" and a foot note with regard to classification of loan as long term is to be given in notes to accounts which is prepared below the balance sheet.

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