CFA Level I · CFA Level I Exam · Analyzing Balance Sheets
Under IFRS, a company presents its statement of financial position using a current/non-current classification. Which of the following items would most likely be classified as a current asset?
The trade receivable due in eight months is most likely current, because IFRS classifies assets expected to be realized within the normal operating cycle as current, even when that cycle is longer than twelve months. The land and the five-year bond are long-term holdings.
- ALand held for long-term capital appreciation
- BA trade receivable due in eight months, within the normal operating cycle of 14 monthsCorrect
- CA 5-year bond investment to be held to maturity
Explanation
Assets expected to be realized within the normal operating cycle are current, even if the cycle exceeds twelve months. The receivable is due within the 14-month cycle. Land held for appreciation and a held-to-maturity 5-year bond are non-current.
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