Kline Company refinanced current debt as long-term debt on January 5, 2019. Kline's fiscal year ended on December 31, 2018, and its financial statements will be issued sometime in early March 2019. Under IFRS, how would Kline classify the debt on its December 31, 2018, balance sheet?
A) In the "mezzanine" between current and noncurrent liabilities.
B) Kline would not classify the debt as current or noncurrent, but rather would write a disclosure note explaining the circumstances.
C) As a noncurrent liability.
D) As a current liability.

Question

Quizplus · Accepted Answer

Under IFRS, liabilities are classified as current if they are expected to be settled within one year from the balance sheet date. Since Kline Company refinanced current debt as long-term debt on January 5, 2019, it would have still been classified as a current liability on December 31, 2018, as the refinancing did not occur until after that date. Therefore, the correct classification would be as a current liability on the December 31, 2018 balance sheet.

Kline Company Refinanced Current Debt as Long-Term Debt on January