Chapter 13 - Test Bank 186 - were presented for redemption...

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Blooms: Analyze Difficulty: 3 Hard Learning Objective: 13-04 Determine when a liability can be classified as a noncurrent obligation. Topic: Current and noncurrent classification 125. Mozart Music Co. began operations in December of 2013. The company sold gift certificates during December in various amounts totaling $1,600. The gift certificates are redeemable for merchandise within three years of the purchase date. However, experience within the industry predicts that 90% of gift certificates will be redeemed within one year. Certificates totaling $500
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Unformatted text preview: were presented for redemption during 2013 as part of merchandise purchases having a total retail price of $750. Required: 1. Determine the liability for gift certificates to be reported in the December 31, 2013, balance sheet. 2. What is the appropriate classification (current or noncurrent) of the liabilities at December 31, 2013? Show calculations. AACSB: Analytic AICPA FN: Measurement Blooms: Apply...
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