ABC Limited has a notes payable of $50,000 which will mature in five months. Management has both the intent and the ability to refinance it by taking out a new loan of the same amount at the due date which would be due only after 5 years. How would this situation be reported in financial statements prepared as of today's date? A: The original notes payable of $50,000 is classified as current, with a footnote describing management's plan for refinancing. B: The original notes payable of $50,000 is classified as current and the new loan is reported as a long-term liability. C: The original notes payable of $50,000 is classified as long-term; the new loan of $50,000 is not included in liabilities at this date. D: The original notes payable of $50,000 need not be reported at all; only the new loan of $50,000 is reported as a long-term liability.
ABC Limited has a notes payable of $50,000 which will mature in five months. Management has both the intent and the ability to refinance it by taking out a new loan of the same amount at the due date which would be due only after 5 years. How would this situation be reported in financial statements prepared as of today's date?
A: The original notes payable of $50,000 is classified as current, with a footnote describing management's plan for refinancing.
B: The original notes payable of $50,000 is classified as current and the new loan is reported as a long-term liability.
C: The original notes payable of $50,000 is classified as long-term; the new loan of $50,000 is not included in liabilities at this date.
D: The original notes payable of $50,000 need not be reported at all; only the new loan of $50,000 is reported as a long-term liability.
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