To help you become familiar with the accounting standards, this case is designed to take you to the FASB’s Web site and have you access various publications. Access the FASB’s Web site at www.fasb.org. Click on “Pronouncements & EITF Abstracts.” In the chapter, we discussed the classification of short-term debt that is expected to be refinanced. For this case, we will use Statement of Financial Accounting Standards No. 6. Open FAS No. 6.
1. Read paragraph 2. What are short-term obligations?
2. Read paragraph 6. The FASB prides itself on following due process and making sure that all decisions are allowed input by interested parties. What unusual event relating to due process is associated with the issuance of this standard?
3. Read paragraph 12. When short-term debt is being reclassified because it is being refinanced, what is the limit on the amount of short-term debt that can be reclassified?