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?

Q: Answer-A company refinances a short-term loan (due in 4 months) after the balance sheet date but before the...

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.

A Non-current because refinancing occurred before approval.

B Current because refinancing was not in place at reporting date.

C Non-current because intent to refinance was present.

D Current only if the lender was unwilling to extend.

E Split between current and non-current.

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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?

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