Question

Bonnie's Family is a non-profit organization which assists families with low-income, special needs children, or are victims of domestic violence. They have a 30 year mortgage with a 5% interest rate which requires a payment of $3,000 per month. In preparing the financial statements for the board, you list the mortgage balance of $287,000 as a current liability based on the board hoping to pay it off within the next year. If Bonnie's pays according to the mortgage agreement, only $20,000 will be paid in the next year. The board asks an independent CPA to advise how to report the mortgage on the balance sheet. 1. Explain how to account for the mortgage payment based on U.S. GAAP, assuming the board feels they will pay the entire balance in the next year. 2. Provide supporting information to the accounting for the mortgage on the balance sheet for your response to requirement 1.

Answer 1

page-1 Answer from the given data 3- → As por us GAAP and IFRS requirements The principle on a lone due to repaid with in next 12 months as on the balance sheet. Date will be soon as Current liability and the balance principle on a loan as soon as long term liability in the balance sheet =) The intrest that will be owned on a - Coan in the feature does not recorded in the accounting record. - It is only recorded with the passage to the time as and when the interest owened terms into actual liability. - In case of bonnies family, the mortage aggrement in for 30 years and the mortage balance that is due to be paid in the next 12 months.

page-2 pie o 1 year is $20,000 only needs to be recorded as Cussent liability in the balance sheet and rest of mortage balance je $ 2,87,000 - $20,000 $ 2,67,000 » It need to be recorded as long term liability in the balance sheet. irrespective of the fact een experied to be repaid in the next year & Note 8 $ 2,87,000 & $20,000 has been - assumed as principle amount only - U.S. GAAP on recording of mortage balance as Current liability and long term liability please give me Thunds up