Included in Harrison Inc.'s account balances at December 31, 2017, were the following: Harrison's December 31, 2017 financial statements were to be issued on March 31, 2018.On January 15, 2018, the entire $600,000 balance of the 6% note was refinanced by issuance of a long-term note to be repaid in 2018.In addition, on March 10, 2018, Harrison made arrangements to refinance the 4% note on a long-term basis.Under IFRS, on the December 31, 2017 statement of financial position, the amount of the notes payable that Harrison should classify as current liabilities is
A)$0.
B)$100,000.
C)$250,000.
D)$350,000.

Question

Included in Harrison Inc.'s account balances at December 31, 2017, were the following:  Harrison's December 31, 2017 financial statements were to be issued on March 31, 2018.On January 15, 2018, the entire $600,000 balance of the 6% note was refinanced by issuance of a long-term note to be repaid in 2018.In addition, on March 10, 2018, Harrison made arrangements to refinance the 4% note on a long-term basis.Under IFRS, on the December 31, 2017 statement of financial position, the amount of the notes payable that Harrison should classify as current liabilities is
A)$0. 
B)$100,000. 
C)$250,000. 
D)$350,000.

Quizplus · Accepted Answer

According to IFRS, a liability should be classified as current if it is expected to be settled within the entity's normal operating cycle or if it is due to be settled within 12 months after the end of the reporting period. Therefore, as of December 31, 2017, the $350,000 balance of the 4% note should be classified as a current liability since it is due to be settled in 2018. The $600,000 balance of the 6% note is not due to be settled until after 2018 and has been refinanced, so it should not be classified as a current liability.