Question

L.O. 11-1) A ist of liabilities follows. For each item, indicate by using the letter C that it will be reported ai current liability, N that it will be reported as a non-current liability, or B that it potentiany can be reported as either or both a current and non-current liability. For obligations that you determine to be N or B, briefly explain why this is the case. P11-5. Current and non-current liabilities Current or non-current Explanation Item Liability liability, or potentially both? Accounts payable Warranties payable Deposits Bank overdraft 1. 2. 3. 4. Sales tax payable Bank loan maruring in five years was in default during the year, before year-end, the lender grants a grace period that extends 12 months after the balance sheet date. 5. 6. Five-year term loan; amortized payments are payable annually 7. 8. Unearned revenue Finance lease obligation 9. HST payable 10. 90-day bank loan 12. Bond payable that matures in two years 13. Obligation under customer loyalty plan. (Customer's discretion as to when to redeem.) 14. Income taxes payable 15 Bank loan that matures in five years that is currently in default 16 Three-year bank loan that matures six months after the balance sheet date Annnu

Answer 1

Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

1	C	Because accounts payable are generally payable within a year.
2	B	Because if warranty payable is for less than 1 year then its is a current liability but if it is for more than 1 year the it is a non current liability.
3	B	Because if deposits is for less than 1 year then its is a current liability but if it is for more than 1 year the it is a non current liability.
4	C	Because bank overdraft are generally payable within a year.
5	C	Because sales tax liability are generally payable within a year.
6	N	Because it is clearly mentioned that a grace period of more than 12 months is given by the lender.
7	B	Because installment due in 1 year will be classified as a current liability but installment due after 1 year will be classified as a non current liability.
8	C	Because unearned revenue are generally adjusted within a year.
9	B	Because installment due in 1 year will be classified as a current liability but installment due after 1 year will be classified as a non current liability.
10	C	Because HST liability are generally payable within a year.
11	C	Because it is clearly mentioned that loan has to be paid in 90 days.
12	N	Because it is clearly mentioned that bond will mature in 2 years.
13	B	Because redemption trend has to be measured then it will be classified as either a current liability or a non current liability.
14	C	Because income tax liability are generally payable within a year.
15	N	Because it is clearly mentioned that bank loan is payable after 5 years.
16	C	Because it is clearly mentioned that bank loan will matured in 6 months.