Question

Which of the following situations would not require that long-term liabilities be reported as current liabilities...

Which of the following situations would not require that long-term liabilities be reported as current liabilities on a classified balance sheet?

Multiple Choice

  • The company intended to refinance the debt and did so prior to issuance of the financial statements.

  • The long-term debt is callable by the creditor.

  • The long-term debt matures within the upcoming year.

  • The creditor has the right to demand payment due to a contractual violation.

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Answer #1

Option 1

The company intended to refinance the debt and did so prior to issuance of the financial statements.
if the company has the ability to refinance a debt then they are nit supposed to treat it as current liability

if the long term debt is callable then obviously it will be treated as current liability

If the creditor can demand repayment in contract violation then also it will be current liability

And the debt whivh is matured within a year that is also called current liability

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