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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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On October 2, 2020, a company borrowed cash and signed a 3-year, interest-bearing note on which both the principal and interest are payable on October 2, 2023. At December 31, 2022, the principal and accrued interest should:

  1. a. be reported on the balance sheet as current liabilities
  2. b. be reported on the balance sheet as concurrent liabilities
  3. c. be reported on the balance sheet as long-term notes payable
  4. d. not be reported on the balance sheet as liabilities

To determine

Identify the manner in which the 3 year interest bearing note should be reported in the balance sheet.

Explanation

Current portion of long-term debt

The portion (amount) of the principal of long-term debts that is payable within one year is called current portion of long-term debt and it is considered as current liability.

The accumulated amount of interest and the principal on notes is payable within one year, that is, from December 31, 2022 to October 2, 2023...

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