Which of the following is TRUE regarding the requirement for a company to exclude Short-Term Obligations from current liabilities?O It must intend to refinance the short-term obligation so that it will not require the use of workingcapital.O It can demonstrate the abilitly to refinance by actually refinancing the debt after the balance sheetdate but before the balance sheet is issued.O It can demonstrate the ability to refinance by entering into a financing agreement.O All of the above are true.

The correct answer is 4. All of the above are true. According to the accounting principles, a…

Answered: Which of the following is TRUE…

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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Similar questions

TRUE OR FALSE?1. Valuation accounts also known as contra accounts or valuation reserve are neither assets nor liabilities. 2. A liability becomes payable on demand if an entity breaches a long-term loan agreement during the reporting period.
Which of the following is correct regarding the classification of investment in debt instruments as financial asset at fair value through OCI? A. All of these. B. An entity may make an irrevocable election to classify investment in a debt instrument that is not held for trading' as such. C. In order to be classified as such, a debt instrument needs to both have simple principal and interest cash flows and be held in a business model in which both holding and selling financial i assets are integral to meeting management's objectives. D. This classification is not allowed for investment in debt instruments.
In a troubled-debt situation, why might the creditor grant concessions to the debtor?
Concept Integration. Review the definitions ofcurrent and fixed assets in Chapter 15 (see page413). Why would a potential lender be interested inthese two classes of assets when reviewing thebalance sheet of a company applying for a long-termloan?
Which of the following is an example of faithful representation? A Showing lease payments as a rental expense B Being prudent by recording the entire amount of a convertible loan as a liability C Creating a provision for staff relocation costs as part of a planned restructuring D Recording a sale and repurchase transaction with a bank as a loan rather than a sale
a parent company has extended financial help as a low interest loan to one of its subsidiaries. the repayment date is negotiable but there is no set time frame. discuss the nature of this loan, its measurement and if it should be disclosed as equity or as debt.
Under the conceptual framework for international financial reporting a non-controlling interest fits the definition of: a liability. an equity item. an asset.
Which of the following statements is correct? Select one: O a. A company may exclude a short-term obligation from current liabilities if it is paid off after the statement of financial position date and subsequently replaced by long-term debt before the statement of financial position is issued. O b. A company may exclude a short-term obligation from current liabilities if it intends to refinance the obligation on a long-term basis. O c. A company may exclude a short-term obligation from current liabilities if it has an unconditional right to defer settlement of the liability for at least 12 months. O d. None of these.
Which of the following statements about "avoidable interest" is false? it is computed only on self-constructed assets. it is computed using a weighted-average interest rate on debt and equity financing. it increases assets on the balance sheet. O it is an approximation of the interest expense the firm would have incurred if it financed all construction through debt.
Which of the following case would allow the capitalization of Interest Expense No Case allows this transaction Borrowing Cost Provided the interest is immaterial Only if Management Allows
Why do analysts need to consider different factors when evaluating a company’s ability to repay short-term versus long-term debt?
In order for the seller of securitized securities to remove the assets (i.e. mortgages) from the balance sheet, the sale must a. have a service agreement b. be overcollateralized c. be without recourse d. be made at a discount (original issue discount)

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