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ACCA Applied Knowledge · Financial Accounting · The main elements of financial statements

Under IFRS, which of the following is classified as a current liability in the statement of financial position of a company with a 31 December year end?

Trade payables due in 60 days are a current liability because they are settled within twelve months of the reporting date. The loan, deferred tax and debenture fall due after more than a year, so they are classified as non-current liabilities.

  1. AA bank loan of $200,000 repayable in full on 30 June two years after the reporting date
  2. BDeferred tax provision expected to reverse in five years
  3. CTrade payables of $45,000 due for settlement in 60 daysCorrect
  4. DA 10-year debenture due for redemption in eight years

Explanation

A liability is current if it is expected to be settled within the normal operating cycle or is due within 12 months of the reporting date. Trade payables due in 60 days meet this test. The loan, the deferred tax and the debenture are all due beyond 12 months, so they are non-current.

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