Question

Identify which of the following items would be classified as a current liability and which would be classified as a non-current liability.

(a)		A bank loan payable due in two years, with principal due at maturity and interest due the first of each month		select a type of liability

(b)		Cash received in advance by Air Canada for airline tickets on flights leaving next month		select a type of liability

(c)		HST collected on sales		select a type of liability

(d)		Unused amount of operating line of credit		select a type of liability

(e)		Provision relating to a lawsuit settlement expected to be paid next month		select a type of liability

(f)		Lease liability with a term ending in three years		select a type of liability

(g)		Bonds payable, due in 10 years		select a type of liability

(h)		Payroll deductions withheld from the employees’ weekly pay		select a type of liability

(i)		Prepaid property tax		select a type of liability

(j)		A $75,000 mortgage payable, of which $5,000 is due in the next year		select a type of liability

(k)		An uncertain liability, the outcome of which is considered to be remote		select a type of liability

(l)		Amounts collected from gift card sales that have not been redeemed by customers		select a type of liability

(m)		Refund liability for products sold to customers but estimated to be returned soon

Answer 1

--Requirement asked

(a)

A bank loan payable due in two years, with principal due at maturity and interest due the first of each --- NON CURRENT LIABILITY.

(b)

Cash received in advance by Air Canada for airline tickets on flights leaving next month--- CURRENT LIABILITY.

(c)

HST collected on sales--- CURRENT LIABILITY.

(d)

Unused amount of operating line of credit

--- CURRENT LIABILITY.

(e)

Provision relating to a lawsuit settlement expected to be paid next month--- CURRENT LIABILITY.

(f)

Lease liability with a term ending in three years--- NON CURRENT LIABILITY.

(g)

Bonds payable, due in 10 years--- NON CURRENT LIABILITY.

(h)

Payroll deductions withheld from the employees’ weekly pay--- CURRENT LIABILITY.

(i)

Prepaid property tax--- CURRENT LIABILITY.

(j)

A $75,000 mortgage payable, of which $5,000 is due in the next year--- NON CURRENT LIABILITY (70000), Current liability (5000)

(k)

An uncertain liability, the outcome of which is considered to be remote--- NON CURRENT LIABILITY.

(l)

Amounts collected from gift card sales that have not been redeemed by customers--- CURRENT LIABILITY.

(m)

Refund liability for products sold to customers but estimated to be returned soon--- CURRENT LIABILITY.