A first-year accounting student is confused by a statement made in a recent class. Her instructor stated that theassets listed in the balance sheet of the IBM Corporation include computers that are classified as current assetsas well as computers that are classified as long-term (noncurrent) assets. In addition, the instructor stated thatinvestments in marketable securities of other corporations could be classified in the balance sheet as either currentor long-term assets.Required:Explain to the student the distinction between current and long-term assets pertaining to the IBM computers andthe investments in marketable securities.The usefulness of the balance sheet is enhanced when assets and liabilities are grouped according to commoncharacteristics. The broad distinction made in the balance sheet is the current versus long-term classification ofboth assets and liabilities.Required:1. Discuss the factors that determine whether an asset or liability should be classified as current or long-term ina balance sheet
A first-year accounting student is confused by a statement made in a recent class. Her instructor stated that the
assets listed in the
as well as computers that are classified as long-term (noncurrent) assets. In addition, the instructor stated that
investments in marketable securities of other corporations could be classified in the balance sheet as either current
or long-term assets.
Required:
Explain to the student the distinction between current and long-term assets pertaining to the IBM computers and
the investments in marketable securities.
The usefulness of the balance sheet is enhanced when assets and liabilities are grouped according to common
characteristics. The broad distinction made in the balance sheet is the current versus long-term classification of
both assets and liabilities.
Required:
1. Discuss the factors that determine whether an asset or liability should be classified as current or long-term in
a balance sheet
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