Answered: RUE OR FALSE? The effect of a lender…

RUE OR FALSE? The effect of a lender agreeing to give the borrowing entity a grace period after the reporting period will make a liability current.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter12: Liabilities: Off-balance-sheet Financing, Retirement Benefits, And Income Taxes

Section: Chapter Questions

Problem 2Q

See similar textbooks

Related questions

Q: What is meant by contingent Liability? How is it shown in final accounts?

A: Liabilities: The claims creditors have over assets or resources of a company are referred to as…

Q: Leasing is often referred to as off-balance-sheet financing because of the way that the transaction…

A: Answer: The correct answer is statement (A).

Q: What type of concessions might a creditor grant the debtor in a troubled-debt situation?

A: Debt is the amount owed by the company for a particular period from the date of the company's…

Q: which of the followings is considered as long term liability :Select one .a mortgage payable .b…

A: a. mortgage payable is the right answer. Other option are incorrect as they are short term…

Q: When the amount of a contingent liability cannot be reasonably estimated but its likelihood is…

A: There are three types of contingent liabilities and their treatment SR. NO. TYPE TREATMENT…

Q: What evidence is necessary to demonstrate the ability to defer settlement of short-term debt?

A: Short-term debt: Short-term debt refers to the current liability of an organization. This means that…

Q: What evidence is necessary to demonstrate the ability toconsummate the refinancing of short-term…

Q: When an entity breaches under a long-term loan agreement on or before the end of the reporting…

A: If an entity expects debt to be settled in the normal operating cycle, it is classified as Current…

Q: what conditions are not necessary to exclude a short term obligation from current liabilities?

A: Current liabilities: It refers to short term financial obligations that are to be discharged within…

Q: Which of the following is not a condition necessary to exclude a short-term obligation from current…

A: SHORT-TEAM OBLIGATIONS: Debt, also called current liabilities, is a firm's financial obligations…

Q: contingent liabilities? Which two conditions have to be met in der to report a contingent liability…

A: The foundation for determining investor returns and analyzing a company's financial structure is the…

Q: Under what conditions should a short-term obligation beexcluded from current liabilities?

A: Current liabilities: The debt obligations owed by a company to creditors and suppliers and are to be…

Q: A contractual agreement in which the borrower receives something of value now and agrees to pay the…

A: Solution: A contractual agreement in which the borrower receives something of value now and agrees…

Q: Assuming the borrower is in no danger of default, under what conditions might a lender be willing to…

A: There can be majorly two possibilities under which a lender may accept a lesser amount than that of…

Q: If the down payment is non-refundable, how much is the contract liability to be initially recorded?

A: Contract liability that is to be recorded initially can be calculated by adding the down payment…

Q: A troubled debt restructuring is a situation in which * O the debtor has clearly demonstrated an…

A: Troubled debt restructuring represents the situation where the debtor is facing economic…

Q: Which of the following would not be considered a general long term liability? Select one: a. Long…

A: Short term obligations are the obligations that have to be paid within a year. whereas, long term…

Q: How does the difference between the book value of the debt and the reacquisition price represents…

A: Definition: Early extinguishment debt: When the debt obligations are retired before its scheduled…

Q: A contingent liability: O Is always of a specific amount Is a potential obligation that depends on a…

A: Solution: A contingent liability is a liability that may occur depending on the outcome of an…

Q: Determine whether the following statement is true or false, and explain why. A loan is amortized if…

A: Borrowing by an individual or a corporation is the method through which the individual and the…

Q: An obligation that is contingent on the occurrence of a future event should be reported in the…

A: Financial statements: The financial statements refer to the combination of a various statements like…

Q: An installment note is a liability requiring a series of payments to the lender. True or False True…

A: Introduction: An instalment note is a legal obligation or liability that requires the lender to…

Q: If a problem is silent as to whether a warranty payable is short-term or long-term, will it be…

A: Warranty payable represents a liability account that reports the estimated amount that a company…

Q: Which of the following statements is false?a. A contingent liability should be disclosed in the…

A: A contingent liability is a liability which occurrence is depending on the outcome of a uncertain…

Q: Interest payable is shown on the Oincome statement as an operating exp Obalance sheet as a long-term…

A: Interest payable is a liability account, shown on a company's balance sheet, which represents the…

Q: Short-term obligations can be reported as noncurrent liabilities if the company (a) intends to…

A: There are two conditions in which short term obligations can be reported as non current liabilities…

Q: When an entity breaches an undertaking under a long-term loan agreement on or before the balance…

A: As per IAS 1, Presentation of financial statement, Current liabilities are the liabilities of an…

Q: How are leases and installment notes the same? How do they differ?

A: Lease Lease is a contractual agreement whereby the right to use an asset for a particular period of…

Q: Must obligations be known contractual debts in order to be reported as liabilities?

A: Liabilities: The claims creditors have over assets or resources of a company are referred to as…

Q: Why would lenders, in general, tend to set loan maturities (not amortization, but when the loan…

A: Loan Maturity: The time period for which a loan is extended is known as the loan period. The date…

Q: RUE OR FLASE? The effect of a lender agreeing to give the borrowing entity a grace period within…

A: Non Current Liability are long term liabilities where their payment is due 12 months after the…

Q: What are the general rules for measuring and recognizinggain or loss by both the debtor and the…

A: At the time when restructuring of a loan is taking place, the creditor must compute the loss…

Q: opinion: Should lease payments be a current liability included in the acid-test ratio? why

A: Acid-test ratio: The financial ratio which evaluates the ability of a company to pay off the instant…

Q: If problem is silent as to the terms of a Warranty Payable, will it be presented in the current…

A: Warranty Payable:-It is a liability for the company which means the company has to pay for repair…

Q: Which of the following is a characteristic of a current liability? A. It is an avoidable…

A: Liabilities are classified into two types. 1. Current liabilities ; which are expected to be paid…

Q: ne loans which are to be repaid within a short O a. Fixed liabilities b. Long-term liabilities C.…

A: Ans. Liabilities can be of many types - i. Current Liabilities ii. Non-current Liabilities iii.…

Q: TRUE OR FALSE? (Based on the book.) The effect of a lender agreeing to give the borrowing entity a…

A: SOLUTION NON CURRENT LIABILITIES ARE THE COMPANY'S LONG TERM FINANCIAL DEBTS OR LIABILITIES THAT ARE…

Q: TRUE OR FALSE? 1. Current assets less current liabilities equals net assets.

A: Net assets Net assets are the value of a company’s assets minus its liabilities. It is calculated…

Q: When an entity breaches a covenant under a long-term loan agreement on or before the end of the…

A: International Accounting Standards (IAS) 1 deals with the "classification of liabilities as current…

Q: Substitute of term loan facility is O Financial guarantee O Performance guarantee O Personal…

A: Term loan is a loan which is given by a bank to the borrower for longer periods usually more than a…

Q: Warranty liability is an estimate based on past warranty claims. How might a company determine how…

A: Warranty Liability MEANING : A warranty is a guarantee that a company will replace or fix a…

Q: Which of the following is not a liability?

A: Liabilities: Liabilities are referred to as the obligation of the business towards the creditors…

Q: A credit derivative allows creditors and debtors to _________ their exposure to credit risk. For…

A: A credit derivative is a financial contract that allows the parties to minimize their exposure to…

Q: What accounts are used to record a contingent warranty liability that is probable and estimable…

A: Warranty is a form of assurance being provided by the seller to the buyer that if there will be any…

Question

TRUE OR FALSE?

The effect of a lender agreeing to give the borrowing entity a grace period after the reporting period will make a liability current.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

TRUE OR FALSE?The effect of a lender agreeing to give the borrowing entity a grace period after the reporting period will make a liability current.
TRUE OR FLASE? The effect of a lender agreeing to give the borrowing entity a grace period within the reporting period will make a liability noncurrent.
TRUE OR FALSE? (Based on the book.)The effect of a lender agreeing to give the borrowing entity a grace period within the reporting period will make a liability noncurrent.
When an entity breaches a covenant under a long-term loan agreement on or before the end of the reporting periodwith the effect that the liability becomes payable on demand, the liability is classified as noncurrent whenI. The lender has agreed after the end if the reporting period and before the financial statements areauthorized for issue not to demand payment as a consequence of the breach.II. The lender has agreed on or before the end of the reporting period to provide a grace period ending atleast twelve months after that date. a. Both I and IIb. Neither I and IIc. I onlyd. II only
When an entity breaches under a long-term loan agreement on or before the end of the reporting period with the effect that the liability becomes payable on demand, the liability is classified as Current under all circumstances Noncurrent under all circumstances Current if the lender has agreed after the reporting period and before the issuance of the statements not to demand payment as a consequence of the breach. Noncurrent if the lender agreed after the reporting period to provide grace period for at least twelve months after the reporting period.
Short-term obligations can be reported as noncurrent liabilities if the company (a) intends to refinance ona long-term basis and (b) demonstrates the ability to do so by actual financing or a formal agreement to doso.
If a problem is silent as to whether a warranty payable is short-term or long-term, will it be considered a short-term or a long term liability?
TRUE OR FALSE? 1. Current assets less current liabilities equals net assets.2. The effect of a lender agreeing to give the borrowing entity a grace period after the reporting period will make a liability current.3. The effect of a lender agreeing to give the borrowing entity a grace period within the reporting period will make a liability noncurrent.
What are the criteria for classifying an item as a current liability? What are some examples of current liabilities? Why is it important to classify a portion of long-term debt on a yearly basis as a current liability? What is the implication of misclassifying a liability as current or long-term?
The indenture is a contract between the issuer and lenders that does all the following EXCEPT ______. a. specify the manner in which the principal must be repaid b. give management's expectations about return of the proceeds c. list any restrictive covenants d. detail the nature of the debt issue
What relevant assertion should be used to record loans receivable net of an allowance for loan losses when allowance should adequately cover any estimated losses inherent in the loan portfolio but not excessive losses? a. Existence or occurrenceb. Valuation or allocationc. Cutoffd. Rights or obligations
Which of the following is an arrangement by which one party promises to pay a sum of money to policyholder as protection against an adverse or unfavorable occurrence of event? a. Short Term Loans b. Fixed Deposit c. Insurance d. Investment