PRC-1 · Chapter 10 · Question 38 of 100
A business has a bank loan of Rs. 500,000. Rs. 100,000 of the principal is due to be repaid within the next 12 months. How should this loan be presented in the Statement of Financial Position?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 400,000 as a Non-Current Liability and Rs. 100,000 as a Current Liability.
Explanation
The portion of a long-term debt that is due within 12 months from the reporting date must be classified as a current liability, while the remainder stays as a non-current liability.
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