Refinancing Short-Term obligations

Question 1

How is this tested?

Answer 1

• Multiple Choice

- Facts about refinancing and ask whether it should be booked as current or non current

Question 2

GAAP Criteria for reclassification

Answer 2

1) Intent: Actions by board of directors and documentation with a financial institution
2) ability: They have the ability to take actions and it can occur before the financial statements are issued.

Question 3

What are actions are needed to reclassify

Answer 3

1) Extinguishment of debt by issuing stock
2) Refiance the current liability with a non current
3) Enter into a irrevocable agreement to refinance

Question 4

What are the limits to reclassification?

Answer 4

Limited to the maximum amount in the agreement