Under IFRS, even if the entity plans to refinance long-term debt, the current portion must be reported as a current liability UNLESS
A) long-term financing has been completed after the statement of financial position date, but before the financial statements are released.
B) management intends to refinance the debt on a long-term basis.
C) at statement of financial position date, the entity expects to refinance under an existing agreement for at least a year, and the decision is solely at its discretion.
D) management intends to discharge the debt by issuing shares.

Question

Quizplus · Accepted Answer

According to IFRS, the current portion of long-term debt must be reported as a current liability unless, at the statement of financial position date, the entity expects to refinance under an existing agreement for at least a year, and the decision to refinance is solely at its discretion. Therefore, option C is the correct answer. Option A is incorrect because completion of long-term financing after the statement of financial position date does not affect the classification of current and long-term liabilities. Option B is incorrect because management's intent to refinance is not enough to reclassify the current portion as a long-term liability. Option D is incorrect because issuing shares does not discharge long-term debt.

Under IFRS, Even If the Entity Plans to Refinance Long-Term