FASB 78 is used to determine the appropriate period to use as a basis for classifying current assets.
"Current Assets and Current Liabilities," to specify the balance sheet classification of obligations that, by their terms, are or will be due on demand within one year (or operating cycle, if longer) from the balance sheet date. It also specifies the classification of long-term obligations that are or will be callable by the creditor either because the debtor's violation of a provision of the debt agreement at the balance sheet date makes the obligation callable or because the violation, if not cured within a specified grace period, will make the obligation callable. Such callable obligations are to be classified as current liabilities unless one of the following conditions is met:
The creditor has waived or subsequently lost the right to demand
repayment for more than one year from the balance sheet date.
For long-term obligations containing a grace period within which
the debtor may cure the violation, it is probable that the
violation will be cured within that period, thus preventing the
obligation from becoming callable.
Short-term obligations expected to be refinanced on a long-term
basis, including those callable obligations discussed herein,
continue to be classified in accordance with FASB Statement No. 6,
Classification of Short-Term Obligations Expected to Be Refinanced.
This Statement is effective for financial statements for fiscal
years beginning after December 15, 1983 and for interim periods
within those fiscal years.
Bronson Co.'s accounting department is implementing a new general ledger software package. The system provides definitions...
ABC Corp. expects that a significant portion of its deferred tax
assets will not be realized. Which section of the Accounting
Standard Codification should ABC consult to determine whether a
valuation allowance should be established for this asset? Enter
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David has a good understanding of the differences between a statement of cash flows prepared using the direct method versus one prepared using the indirect method. Before making a final decision on which method Act Co. will use to prepare its statement of cash flows, David has asked the auditor, Laughlin, to explain the disclosure requirements specific to the indirect method, aside from the reconciliation requirements. Find authoritative guidance that responds to this inquiry. Enter your response in the answer...