Homework Answers
Ans :- Option B i.e. Rs. 5000000
As per Ind As-1, Any liability will be classified as Current liability if :
1. Liability to be settled in next 12 months of reporting period. Or
2. It doesn not have unconditional right to settle it in next 12 months of reporting period
Also, As per PARA-73 of Ind-AS 1, if any entity expects and has discretion to refinance the liability for atleast 12 months then it should be classified as current liability. However if it does not have any discretion to refinace the liability then it will be treated as current liability.
For 12% note payable of Rs. 5000000 it seems company don't have any discretion to refinace it's obligation on 31-Dec-2017(i.e. reporting date) and it matures within 12 months (i.e. 01-mar-2018) of reporting date, hence it should be classified as current liability.
For 10% note payable of Rs. 3000000, As per existing loan agreement company has discretion to refinance liability for atleast 12 months after reporting date, hence it should be classified as non-current liabilty.
Hence, by applying Ind-As 1 and it's para 73, Current liability as on 31-Decc-2017 is Rs. 5000000.
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