Final answer:
When using a noncurrent asset to extinguish a current liability, it is placed in the Non-current Assets section of the balance sheet.
Step-by-step explanation:
When using a noncurrent asset to extinguish a current liability, it is placed in the Non-current Assets section of the balance sheet. This is because the noncurrent asset is being used to pay off a current liability, which is a short-term obligation that is expected to be settled within one year.
For example, if a company uses a piece of machinery (a noncurrent asset) to pay off a short-term loan (a current liability), the value of the machinery would be recorded in the Non-current Assets section of the balance sheet.
It is important to note that this accounting treatment assumes that the noncurrent asset being used to extinguish the current liability still has value and can be sold or used for its intended purpose.