Parmlee Inc. has several assets and liabilities on its balance sheet. For each of the items...

Parmlee Inc. has several assets and liabilities on its balance sheet. For each of the items below, decide whether it is a current asset (CA), current liability (CL), long-term asset (LTA), long-term liability(LTL), or contra-liability (COL).

CA/CL/LTA/LTL/COL

a. 15 year lease obligation a. ________

b. Amounts owed to the utility company b. ________

c. building owed by the company c. ________

d. Current portion of long-term debt d. ________

*can you please write the answer not pic , thank you

Expert Solution

Answer:

a. 15 year lease obligation - LTL (Long-Term Liabilities)

b. Amounts owed to the utility company - CL (Current Liabilities)

c. Building owned by the company - LTA (Long-Term Assets)

d. Current portion of long-term debt - CL (Current Liabilities)

Explanation:

If a company has an obligation but payable after one year from the end of respective reporting period, such obligation shall be considered as Long-Term Liabilities. So, 15 year lease obligation is classified as LTL.

If a company has an obligation but payable within one year from the end of respective reporting period, such obligation shall be considered as Current Liabilities. So, Amount owed to the utility company and Current portion of long-term debt are classified as CL.

If a company owns an asset which has life of more than one year, such asset shall be considered as Long-Term Asset. So, Building owned by the company is classified as LTA.

jeff jeffy answered 1 year ago

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