Ask Question
25 August, 18:52

Busch Company has these obligations at December 31. For each obligation, indicate whether it should be classified as a current liability, noncurrent liability, or both. (a) A note payable for $100,000 due in 2 years. (b) A 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments. (c) Interest payable of $15,000 on the mortgage. (d) Accounts payable of $60,000.

+2
Answers (1)
  1. 25 August, 20:29
    0
    (a) A note payable for $100,000 due in 2 years. - Non-current liability

    (b) A 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments. - Both

    (c) Interest payable of $15,000 on the mortgage - current liability

    (d) Accounts payable of $60,000 - current liability

    Explanation:

    Current liabity is a liability that its obligations will be paid within a year. For example, accounts payable, a loan that must be repaid in 6months.

    Non-current liability is a liability that its obligations will be paid more than a year. For example long term loan that has a life span of 5years.

    So in the question:

    (a) A note payable for $100,000 due in 2 years. - Non-current liability

    (b) A 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments. - Both ($200,000 payable in ten years is a non-current liability while the $annual payment of $20,000 is a current liability.

    (c) Interest payable of $15,000 on the mortgage - current liability

    (d) Accounts payable of $60,000 - current liability
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Busch Company has these obligations at December 31. For each obligation, indicate whether it should be classified as a current liability, ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers