Included in Harrison Inc.'s account balances at December 31, 2020, were the following: Harrison's December 31, 2020 financial statements were to be issued on March 31, 2021. On January 15, 2021, the entire $ 600,000 balance of the 6% note was refinanced by issuance of a long-term note to be repaid in 2024. In addition, on March 10, 2021, Harrison made arrangements to refinance the 4% note on a long-term basis. Under IFRS, on the December 31, 2020 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, 2020, were the following:  Harrison's December 31, 2020 financial statements were to be issued on March 31, 2021. On January 15, 2021, the entire $ 600,000 balance of the 6% note was refinanced by issuance of a long-term note to be repaid in 2024. In addition, on March 10, 2021, Harrison made arrangements to refinance the 4% note on a long-term basis. Under IFRS, on the December 31, 2020 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 twelve months from the reporting date. As the 4% note was scheduled to mature on March 1, 2021, it should have been classified as current on the December 31, 2020 statement of financial position. Therefore, the current liabilities should include the balance of the 4% note, which was $ 350,000. The 6% note was refinanced on January 15, 2021, and therefore, it does not need to be classified as a current liability on the December 31, 2020 statement of financial position.