Question

Short-term debt that is expected to be refinanced on a long-term basis may be excluded from the current liability classification if the company has the intent to refinance or the ability to refinance.

Select one:

True

False

Answer 1

The answer is TRUE

Short-term debt that is expected to be refinanced on a long-term basis may be excluded from the current liability classification if the company has the intent to refinance or the ability to refinance.

A company is required to exclude a short term obligation from current liablities only if both of the following conditions are met. The Conditions are

*** It must intend to refinance the obligation on a long term basis

*** It must demonstrate the an abililty to the refinancing.