Hilton Company issued a four-year interest-bearing note payable for $500,000 on January 1, 2013. Each January the company is required to pay $125,000 on the note. How will this note be reported on the December 31, 2014 statement of financial position?

Question

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The note is a long-term debt because it has a maturity of more than one year. The balance of the note payable on December 31, 2014 is $375,000 ($500,000 - $125,000). The current portion of the note payable is $125,000, which is the amount due within one year.

Hilton Company Issued a Four-Year Interest-Bearing Note Payable for $500,000