ABC Limited has a notes payable of $50,000 which will mature in five months. Management has both the intent and the ability to refinance it by taking out a new loan of the same amount at the due date which would be due only after 5 years. How would this situation be reported in financial statements prepared as of today's date?A: The original notes payable of $50,000 is classified as current, with a footnote describing management's plan for refinancing.B: The original notes payable of $50,000 is classified as current and the new loan is reported as a long-term liability.C: The original notes payable of $50,000 is classified as long-term; the new loan of $50,000 is not included in liabilities at this date.D: The original notes payable of $50,000 need not be reported at all; only the new loan of $50,000 is reported as a long-term liability.

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Asked Dec 19, 2019
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ABC Limited has a notes payable of $50,000 which will mature in five months. Management has both the intent and the ability to refinance it by taking out a new loan of the same amount at the due date which would be due only after 5 years. How would this situation be reported in financial statements prepared as of today's date?

A: The original notes payable of $50,000 is classified as current, with a footnote describing management's plan for refinancing.

B: The original notes payable of $50,000 is classified as current and the new loan is reported as a long-term liability.

C: The original notes payable of $50,000 is classified as long-term; the new loan of $50,000 is not included in liabilities at this date.

D: The original notes payable of $50,000 need not be reported at all; only the new loan of $50,000 is reported as a long-term liability.

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