Unformatted text preview: classification as a current liability (that is, reported as a noncurrent liability). Explain. 1. Current liability: $15 million The debt should be reported as a current liability because it is payable in the upcoming year, will not be refinanced with long-term obligations, and will not be paid from a sinking fund. 2. Current liability: $30 million The requirement to classify currently maturing debt as a current liability includes debt that is callable by the creditor in the upcoming year—even if the debt is not expected to be called. 3. Noncurrent liability: $18 million The current liability classification includes (a) situations in which the creditor has the right to demand payment because an existing violation of a provision of the debt agreement makes it callable and (b) situations in which debt is not yet callable, but will be callable within the year if an existing violation is not corrected within a specified grace period—unless it's probable the...
View Full Document
- Spring '11
- Balance Sheet, 1981, 1986, 1971, 1970