Statement I- A long-term debt that is due to be settled within twelve months after the end of the reporting period is classified as noncurrent when an agreement to refinance or reschedule payment on a long-term basis is completed after the end of the reporting period and before the financial statements are authorized for issue Statement II – When an entity breaches a covenant under a long-term loan agreement on or before the end of the reporting period with the effect that the liability becomes payable on demand, the liability is classified noncurrent when the lender agreed on or before the end of reporting period to provide a grace period at least twelve months after that date a. Only statement I is correct b. Only statement II is correct c. Both statements are correct d. Both statements are incorrect
Statement I- A long-term debt that is due to be settled within twelve months after the end of the reporting period is classified as noncurrent when an agreement to refinance or reschedule payment on a long-term basis is completed after the end of the reporting period and before the financial statements are authorized for issue Statement II – When an entity breaches a covenant under a long-term loan agreement on or before the end of the reporting period with the effect that the liability becomes payable on demand, the liability is classified noncurrent when the lender agreed on or before the end of reporting period to provide a grace period at least twelve months after that date a. Only statement I is correct b. Only statement II is correct c. Both statements are correct d. Both statements are incorrect
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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please choose the correct letter of answer and provide a brief explanation. see the attached picture
Transcribed Image Text:Statement I- A long-term debt that is due to be settled within twelve months
after the end of the reporting period is classified as noncurrent when an
agreement to refinance or reschedule payment on a long-term basis is
completed after the end of the reporting period and before the financial
statements are authorized for issue
Statement II - When an entity breaches a covenant under a long-term loan
agreement on or before the end of the reporting period with the effect that the
liability becomes payable on demand, the liability is classified noncurrent when
the lender agreed on or before the end of reporting period to provide a grace
period at least twelve months after that date
a. Only statement I is correct
b. Only statement Il is correct
c. Both statements are correct
d. Both statements are incorrect
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