Question

Go to the FASB Accounting Standards Codification.

1. Determine the specific citation for allowing short-term liabilities expected to be refinanced to be classified as long-term liabilities.

2. Determine the specific citation for when a contract doesn't exist for purposes of recognizing revenue.

Answer 1

Specific citation:

Debt (Topic 470)

Simplifying the Classification of Debt in a Classified Balance Sheet

The principle is that an entity should classify an instrument as noncurrent if either of the following criteria is met as of the balance sheet date:

1. The liability is contractually due to be settled more than one year (or operating cycle, if longer) after the balance sheet date.

2. The entity has a contractual right to defer settlement of the liability for at least one year (or operating cycle, if longer) after the balance sheet date.

ASC 606, Revenue from Contracts with Customers, was issued jointly by the FASB and IASB in 2014.

ASC 606 Part 1: Identify Contracts and Thresholds

For the purpose of applying this standard, a contract does not exist if each party to the contract has the unilateral enforceable right to terminate a wholly unperformed contract without compensating the other party or parties. A contract is wholly unperformed if both the following criteria are met.

a. The entity has not yet transferred any promised goods or services to the customer and

b. The entity has not yet received and yet not entitled to receive, any consideration in exchange for the promised goods or services.