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IAI Actuarial Core Principles · Business Finance · Construction and features of company accounts and reports

In a company's statement of financial position, which of the following is classified as a non-current liability?

A debenture redeemable in six years is a non-current liability because it falls due more than twelve months after the reporting date. The overdraft, trade payables and current tax payable are all due within a year and are therefore classified as current liabilities.

  1. ABank overdraft repayable on demand
  2. BA debenture redeemable in six years' timeCorrect
  3. CProposed dividend declared after the reporting date
  4. DTrade payables due in 45 days
  5. Income tax payable for the current year

Explanation

A liability due beyond twelve months from the reporting date is non-current. A debenture redeemable in six years fits this. Overdrafts on demand, trade payables and current tax are all settled within the operating cycle or twelve months, so they are current.

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