Question

Knowledge Check 01
Which of the following statements about the classification of obligations expected to be refinanced? (Select all that apply.)

Check All That Apply

• Under IFRS, liabilities payable within the coming year are classified as long-term liabilities only if refinancing is completed before the balance sheet date.

  Under IFRS, liabilities payable within the coming year are classified as long-term liabilities only if refinancing is completed before the balance sheet date.

• Under IFRS, liabilities payable within the coming year cannot be classified as long-term liabilities even if refinancing is completed before the balance sheet date.

  Under IFRS, liabilities payable within the coming year cannot be classified as long-term liabilities even if refinancing is completed before the balance sheet date.

• Under U.S. GAAP, liabilities payable within the coming year are classified as long-term liabilities if refinancing is completed before the date of issuance of the financial statements.

  Under U.S. GAAP, liabilities payable within the coming year are classified as long-term liabilities if refinancing is completed before the date of issuance of the financial statements.

• Under U.S. GAAP, liabilities payable within the coming year cannot be classified as long-term liabilities even if refinancing is completed before the date of issuance of the financial statements.

  Under U.S. GAAP, liabilities payable within the coming year cannot be classified as long-term liabilities even if refinancing is completed before the date of issuance of the financial statements.

Answer 1

Classification of obligations expected to be refinanced,

a, ln general,

if a liability which is to be repaid within 12 months is treated as current liability.

if a liability whichbe repaid after 12 months is treated as non current liability.

the classification of obligation will be decided on the balance sheet date.

point no 1 : under ifrs , refinancing is in hands of creditor to reschedule the payment or fresh loan instead of old loan.

even though refianancing is completed before the date of balance sheet but payable within coming year it is treated as current liabilty.

point no 2 : under ifrs , refinancing is in hands of creditor to reschedule the payment or fresh loan instead of old loan.

cannot be classified as long term liability even though refianancing is completed before the date of balance sheet but payable within coming year it is treated as current liabilty.

point no 3 : under us gaap, refinancing is in hands of creditor to reschedule the payment or fresh loan instead of old loan.

possible to  be classified as long term liability as refianancing is completed before the date of balance sheet.

point no 4 : under us gaap, refinancing is in hands of creditor to reschedule the payment or fresh loan instead of old loan.

possible to  be classified as long term liability as refianancing is completed before the date of balance sheet as the discretion is between the creditor and with the management of the company.

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