According to AASB 101,an entity will classify a liability as current when:
A)it expects to settle the liability outside its normal operating cycle.
B)it expects to settle the liability within its normal operating cycle.
C)the entity has an unconditional right to defer the settlement of the liability for at least 12 months after the reporting date.
D)the liability is due to be settled more than 12 months after the reporting date.

Question

Quizplus · Accepted Answer

According to AASB 101, a liability is classified as current if the entity expects to settle it within its normal operating cycle, which is generally twelve months from the reporting date. Therefore, option B is the correct choice. Option A is incorrect because settling the liability outside the normal operating cycle would classify it as non-current. Option C is incorrect because having the right to defer settlement does not determine the classification of the liability. Option D is incorrect because liabilities due to be settled more than twelve months after the reporting date are also classified as non-current.

According to AASB 101,an Entity Will Classify a Liability as Current