At balance date for Year 1,Elpha Limited had a loan from its bankers that it expected to settle within three months.The loan term was renegotiated after balance date and before the authorisation date of the financial statements,and the repayment date was extended by two years.For Year 1 financial statement presentation purposes this loan is classified by Elpha Limited as:
A)a non-current liability
B)a current liability
C)a contingent liability
D)an off-statement of financial position liability.

Question

Quizplus · Accepted Answer

The loan was initially expected to be settled within three months, indicating that it should have been classified as a current liability in Year 1 financial statements. Even though the loan term was renegotiated after balance date, it was extended by only two years, making it still due within a year from the balance date. Therefore, it should continue to be presented as a current liability in Year 1 financial statements.

At Balance Date for Year 1,Elpha Limited Had a Loan