Lechon Corporation has multiple long-term arrangement containing a debt covenant. As of December 31, 2022, the company disclosed current liabilities of P450,786 in its financial statements. The following notes refer to these six (6) long-term loans each amounting to P75,131: Note 1: The specific requirements in the debt covenant have to be met as at December 31 every year. The loan is due in 3 years. The company breaches the debt covenant before the period end. As a result, the loan becomes payable on demand. Note 2: Same details in note 1, but the loan arrangement stipulates that the entity has a grace period of 3 months to rectify the breach and during which the lender cannot demand immediate repayment. Note 3: Same details in note 1, but the lender agreed not to demand repayment as a consequence of the breach. The company obtains this waiver on December 31 and the waiver is for a period of more than 12 months after the period end. Note 4: Same details in note 3, however the company obtained the waiver before December 31 and the waiver is for a period of less than 12 months after the period end. Note 5: Same details in note 3, however the company obtained the waiver after December 31 but before the financial statements are authorized for issue. Note 6: Same details in note 1, except that at December 31, the debt covenants are met. However, circumstances change unexpectedly and the entity breaches the debt covenant after the period end but before the financial statements are authorized for issue. What is the amount of total current liabilities to be presented in the balance sheet? P225,393 P375,655 P150,262 P450,786 P300,524

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lechon Corporation has multiple long-term arrangement containing a debt covenant. As of December 31, 2022, the company disclosed current liabilities of P450,786 in its financial statements. The following notes refer to these six (6) long-term loans each amounting to P75,131:

Note 1: The specific requirements in the debt covenant have to be met as at December 31 every year. The loan is due in 3 years. The company breaches the debt covenant before the period end. As a result, the loan becomes payable on demand.

Note 2: Same details in note 1, but the loan arrangement stipulates that the entity has a grace period of 3 months to rectify the breach and during which the lender cannot demand immediate repayment.

Note 3: Same details in note 1, but the lender agreed not to demand repayment as a consequence of the breach. The company obtains this waiver on December 31 and the waiver is for a period of more than 12 months after the period end.

Note 4: Same details in note 3, however the company obtained the waiver before December 31 and the waiver is for a period of less than 12 months after the period end.

Note 5: Same details in note 3, however the company obtained the waiver after December 31 but before the financial statements are authorized for issue.

Note 6: Same details in note 1, except that at December 31, the debt covenants are met. However, circumstances change unexpectedly and the entity breaches the debt covenant after the period end but before the financial statements are authorized for issue.

What is the amount of total current liabilities to be presented in the balance sheet?

P225,393

P375,655

P150,262

P450,786

P300,524

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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