Nevada Harvester Corporation
Current—noncurrent classification of debt | | ● LO1 LO4 |
The balance sheet at December 31, 2011, for Nevada Harvester Corporation includes the liabilities listed below:
Required:
1. | | Determine the amount that can be excluded from classification as a current liability (that is, reported as a noncurrent liability) for each. Explain the reasoning behind your classifications. | | | |
Solution:
1.a. A Zero dollars will be excluded from current liability because it is callable within year. Even if the debt is not expected to be called, there is a possibility that creditor has the right to demand.
1.b. Notes payable 5 million will be excluded from current liability and 1 million will be classified as current liability because company
The balance sheet at December 31, 2011, for Nevada Harvester Corporation includes the liabilities listed below:
Required:
1. | | Determine the amount that can be excluded from classification as a current liability (that is, reported as a noncurrent liability) for each. Explain the reasoning behind your classifications. | | | |
Solution:
1.a. A Zero dollars will be excluded from current liability because it is callable within year. Even if the debt is not expected to be called, there is a possibility that creditor has the right to demand.
1.b. Notes payable 5 million will be excluded from current liability and 1 million will be classified as current liability because company