Skip to content

CA Intermediate · Advanced Accounting · Financial Statements of Companies

Kaveri Textiles Ltd. has a 9% term loan of ₹40,00,000 repayable in 4 equal annual instalments of ₹10,00,000, the first instalment falling due 8 months after the balance sheet date. For presentation in the Balance Sheet as per Schedule III (Division I), how should the loan be shown?

₹10,00,000 payable within twelve months is shown as current maturities of long-term debt under other current liabilities, while the balance ₹30,00,000 remains in long-term borrowings. Schedule III requires separating the portion due within twelve months of the balance sheet date.

  1. AEntire ₹40,00,000 as long-term borrowings
  2. B₹10,00,000 as current maturities of long-term debt under other current liabilities and ₹30,00,000 as long-term borrowingsCorrect
  3. C₹10,00,000 as short-term borrowings and ₹30,00,000 as long-term borrowings
  4. DEntire ₹40,00,000 as other current liabilities

Explanation

The instalment due within 12 months of the balance sheet date is a current maturity of a long-term debt and is shown under other current liabilities. The remaining 3 instalments of ₹10,00,000 each, i.e. ₹30,00,000, stay in long-term borrowings. Showing the full amount as long-term ignores the current maturity.

Did you get it right without looking?

One question tells you little. A timed set on Financial Statements of Companies shows your real accuracy, how long you take and where you lose marks.

Practise Financial Statements of CompaniesFree diagnostic mock

More Financial Statements of Companies questions