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    Question

    A company refinances a short-term loan (due in 4 months)

    after the balance sheet date but before the financial statements are authorised. Management argues it should classify the loan as non-current since refinancing is completed. How should this be treated?
    A Non-current because refinancing occurred before approval. Correct Answer Incorrect Answer
    B Current because refinancing was not in place at reporting date. Correct Answer Incorrect Answer
    C Non-current because intent to refinance was present. Correct Answer Incorrect Answer
    D Current only if the lender was unwilling to extend. Correct Answer Incorrect Answer
    E Split between current and non-current. Correct Answer Incorrect Answer

    Solution

    Classification is based on rights in existence at the reporting date. Since refinancing was not completed by year-end, the liability remains current, even if refinancing is arranged afterward.

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