Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 13: Q13-2IFRS (page 715)

Question: What evidence is necessary to demonstrate the ability to defer settlement of short-term debt?

Short Answer

Expert verified

Answer

The ability to defer settlement of short-term debt can be demonstrated by entering into a financing agreement that allows the firms to refinance the debt on a long-term basis on conditions that are easily ascertainable before the next reporting date.

Step by step solution

01

Meaning of Short-term Debt

Short-term debt is, also termed current liabilities, is a company’s financial obligations that are anticipated to be paid off in a year. Examples of short-term debt are accounts payable, wages, and income tax payable

02

Settlement of short-term debt

In case of deferring settlement of short-term debt, the company should demonstrate the evidence by excluding short-term debt from current liabilities and including such short-term debt as a non-current liability. The refinancing amount should be excluded, which is presented within short-term debt, from current liabilities and should list it as a non-current liability.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Carow Corporation purchased, as a held-for-collection investment, \(60,000 of the 8%, 5-year bonds of Harrison, Inc.

for \)65,118, which provides a 6% return. The bonds pay interest semiannually. Prepare Carow’s journal entries for (a) the purchase

of the investment, and (b) the receipt of semiannual interest and premium amortization

E13-10 (L03) (Warranties) Soundgarden Company sold 200 color laser copiers on July 10, 2017, for \(4,000 apiece, together with a 1-year warranty. Maintenance on each copier during the warranty period is estimated to be \)330.

Instructions

Prepare entries to record the sale of the copiers, the related warranty costs, and any accrual on December 31, 2017. Actual warranty costs (inventory) incurred in 2017 were $17,000.

What is an onerous contract? Give two examples of an onerous contract.

How does the acid-test ratio differ from the current ratio? How are they similar?

Grant Company has had a record-breaking year in terms of growth in sales and profitability. However, market research indicates that it will experience operating losses in two of its major businesses next year. The controller has proposed that the company record a provision for these future losses this year, since it can afford to take the charge and still show good results. Advise the controller on the appropriateness of this charge
See all solutions

Recommended explanations on Business Studies Textbooks

Organizational Communication

Read Explanation

Human Resources

Read Explanation

Managerial Economics

Read Explanation

Organizational Behavior

Read Explanation

Business Development

Read Explanation

Change Management

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free