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ACCA Applied Knowledge · Financial Accounting · Statement of financial position

Which of the following correctly describes how a loan note repayable in two instalments, $20,000 within 12 months of the reporting date and $60,000 thereafter, should be presented in the statement of financial position?

The $20,000 repayable within twelve months is shown as a current liability and the remaining $60,000 is shown as a non-current liability, because classification depends on when each portion of the debt falls due for settlement.

  1. A$20,000 as a current liability and $60,000 as a non-current liabilityCorrect
  2. B$80,000 as a non-current liability
  3. C$80,000 as a current liability
  4. D$60,000 as a current liability and $20,000 as a non-current liability

Explanation

The portion due within 12 months of the reporting date is classified as current, and the remainder as non-current. Showing the whole $80,000 as non-current ignores the near-term repayment and misstates liquidity.

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