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Which of the following statements is incorrect?
A) The currently maturing portion of long-term debt must be classified as a current liability.
B) The non-current portion of long-term debt will be correctly reported as a long-term liability.
C) When a company plans to refinance the currently maturing debt on a long-term basis,and has the ability to do so,it may report the currently maturing debt as a long-term liability.
D) The currently maturing portion of long-term debt is a current liability if it is due within one year from the date of the balance sheet,or within the operating cycle,whichever is longer.
Long-Term Debt
Debt that is due for repayment more than one year in the future, often used for significant investments or acquisitions.
Currently Maturing
Refers to liabilities or obligations that are due to be paid or settled within the next fiscal year.
Current Liability
A financial obligation or debt that is due within one year from the balance sheet date or within the entity’s normal operating cycle, whichever is longer.
- Understand the classification and reporting of current and non-current liabilities on the balance sheet.
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Learning Objectives
- Understand the classification and reporting of current and non-current liabilities on the balance sheet.
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