At December 31, 2011, Burr Corporation owes $500,000 on a note payable due February 15, 2012. Assume

Question:

At December 31, 2011, Burr Corporation owes $500,000 on a note payable due February 15, 2012. Assume that Burr follows IFRS and that the financial statements are completed and released on February 20, 2012.

(a) If Burr refinances the obligation by issuing a long-term note on February 14 and by using the proceeds to pay off the note due February 15, how much of the $500,000 should be reported as a current liability at December 31, 2011?

(b) If Burr pays off the note on February 15, 2012, and then borrows $1 million on a long-term basis on March 1, how much of the $500,000 should be reported as a current liability at December 31, 2011, the end of the fiscal year?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...