Which of the following statements is true?
A) If ability to refinance a currently maturing obligation is present, the obligation should be classified as noncurrent debt.
B) If no reasonable estimate can be made of the minimum amount expected to be available for future refinancing, the entire outstanding short-term obligation must be disclosed as a noncurrent obligation.
C) The FASB has concluded that obligations that are due on demand should be classified as current liabilities, even though liquidation of the liabilities is not expected within the next year or operating cycle, whichever is longer.
D) If a refinancing is soon to be accomplished by issuing common stock, a currently maturing short-term obligation should be included in shareholders' equity on the current balance sheet.

Question

Quizplus · Accepted Answer

C) The FASB (Financial Accounting Standards Board) has indeed concluded that obligations due on demand should be classified as current liabilities, regardless of the expectation of liquidation timing. This is because the demandable nature of the obligation makes it due immediately, even if the actual demand for payment may not occur within the next year or operating cycle.

Which of the Following Statements Is True