On December 31, 2011, Zimmer Corporation has $7.9 million of short term debt in the form of

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On December 31, 2011, Zimmer Corporation has $7.9 million of short term debt in the form of notes payable that will be due periodically in 2012 to Provincial Bank. On January 28, 2012, Zimmer enters into a refinancing agreement with the bank that will permit it to borrow up to 60% of the gross amount of its accounts receivable. Receivables are expected to range between a low of $5.7 million in May and a high of $7 million in October during the year 2012. The interest cost of the maturing short-term debt is 15%, and the new agreement calls for a fluctuating interest rate at 1% above the prime rate on notes due in 2013. Zimmer's December 31, 2011 balance sheet is issued on February 15, 2012.

Instructions

(a) Assuming that Zimmer follows private enterprise GAAP, prepare a partial balance sheet for Zimmer Corporation at December 31, 2011, that shows how its $7.9 million of short-term debt should be presented, including any necessary note disclosures.

(b) Assuming that Zimmer follows IFRS, explain how the $7.9 million of short-term debt should be presented on the December 31, 2011 balance sheet.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of 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...
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Related Book For  answer-question

Intermediate Accounting

ISBN: 978-0470161012

9th Canadian Edition, Volume 2

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.

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