Liquidity Ltd's reporting date is 31 March.Some time ago the company issued debentures totaling $10 million, the maturity date of which is 30 June 20X5.The directors are confident that they will be able to refinance the debt as interest rates have fallen from 12% to less than 9%.How should the debentures be classified on 31 March 20X5

Question

Quizplus · Accepted Answer

Given that the maturity date of the debentures is 30 June 20X5, and the reporting date is 31 March 20X5, the whole amount should be classified as a current liability because it is due within 12 months of the reporting date. The directors' confidence in refinancing does not change the classification without concrete actions taken to refinance or restructure the debt before the reporting date.

Liquidity Ltd's Reporting Date Is 31 March