Classification of assets and liabilities 

(a) Distinguish between current assets and non-current assets. 

(b) Distinguish between current liabilities and non-current liabilities. 

(c) Explain why these distinctions are useful. 

(d) A parent provides a loan to a subsidiary. Interest of 8 per cent is paid annually. The loan is repayable on demand. How should the loan be classified in the parent’s balance sheet? 

(e) A subsidiary holds cash and cash equivalent balances with domestic banks. It operates in a country where the host government has the power to prevent or restrict the remittance of cash abroad to fellow subsidiaries and to the parent. The amount of cash held is neither excessive nor short of the subsidary’s operating needs. How should the subsidiary’s cash and cash equivalent balances be classified in the group’s consolidated balance sheet?