Analysis Case $31$ Current versus long$-$term classification LO$32,$ LO$33$

The usefulness of the balance sheet is enhanced when assets and liabilities are grouped according to common characteristics. The broad distinction made in the balance sheet is the current versus long$-$term classification of both assets and liabilities.

Required:

Identify the factors that determine whether an asset or liability should be classified as current or long term in a balance sheet.

Determine whether certain assets and liabilities should be classified as current or long term.