On July 31,2020,Able Co.has a $500,000 15-year mortgage outstanding.Over the next year the company will make 12 monthly payments of $5,000 representing $33,500 of interest and $26,500 of principal repayment.Which of the following best represents how the mortgage will be reported on the July 31,2020 statement of financial position?
Current Liabilities Non-Current Liabilities

Question

Quizplus · Accepted Answer

The mortgage will be reported with the principal repayment portion ($26,500) under current liabilities, as this is the amount due within the next year. The remaining balance of the mortgage after this repayment ($500,000 - $26,500 = $473,500) will be reported under non-current liabilities.