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)Even when a company plans to refinance the currently maturing debt on a long-term basis, and has the ability to do so, it must still report the currently maturing debt as a current liability.
D)The currently maturing portion of long-term debt is a current liability if it is due within one year or from the date of the balance sheet, or within the operating cycle, whichever is longer.

Question

Quizplus · Accepted Answer

This statement is incorrect. If 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 non-current liability, as long as the refinancing is completed before the current liability is due. Therefore, the currently maturing portion of long-term debt does not necessarily need to be classified as a current liability.

Which of the Following Statements Is Incorrect