In the case of classifying a liability as current or non-current,what approach does IAS 1 require if there is no clearly identifiable operating cycle?
A)The most common length of operating cycle for other entities in a comparable industry must be used.
B)The operating cycle of the event that gave rise to the creation of the liability must be used as the basis for determining the liability's operating cycle.
C)The 12-month period from the reporting date must be used.
D)The average operating cycle length over all operations of the entity must be used.

Question

Quizplus · Accepted Answer

IAS 1 requires that if there is no clearly identifiable operating cycle, then the 12-month period from the reporting date must be used as the basis for classifying a liability as current or non-current. This is because a liability is classified as current if it is expected to be settled within 12 months from the reporting date, or the entity's normal operating cycle, whichever is longer. Therefore, the 12-month period from the reporting date is the default basis for determining whether a liability is current or non-current in the absence of a clearly identifiable operating cycle.

In the Case of Classifying a Liability as Current or Non-Current,what