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 as noncurrent when I. The lender has agreed after the end if the reporting period and before the financial statements are authorized for issue not to demand payment as a consequence of the breach. II. The lender has agreed on or before the end of the reporting period to provide a grace period ending at least twelve months after that date. a. Both I and II b. Neither I and II c. I only d. II only
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 as noncurrent when I. The lender has agreed after the end if the reporting period and before the financial statements are authorized for issue not to demand payment as a consequence of the breach. II. The lender has agreed on or before the end of the reporting period to provide a grace period ending at least twelve months after that date. a. Both I and II b. Neither I and II c. I only d. II only
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 as noncurrent when
I. The lender has agreed after the end if the reporting period and before the financial statements are
authorized for issue not to demand payment as a consequence of the breach.
II. The lender has agreed on or before the end of the reporting period to provide a grace period ending at
least twelve months after that date.
a. Both I and II
b. Neither I and II
c. I only
d. II only
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