Question

Karin Company's loan is due on July 1, 2018. What conditions must Karin meet (at a minimum) so that the note can be classified as a long-term liability on the company's balance sheet at December 31, 2017? Check all that apply.

A. The company must have demonstrated the ability to refinance the obligation on a long-term basis.
B. The company must have entered into a long-term refinancing agreement.
C. The company must intend to refinance the obligation on a long-term basis.

Answer 1

A and c

Step-by-step explanation:

Karin company has to pay a loan on July 1, to classify this loan as long term liability on the company's balance sheet they must prove that they are willing to refinance the obligation on the long term basis. If the company is willing to refinance the obligation on a long term basis only then they can classify this loan as a long-term liability.