Wagner Company's financial records show that it has a mortgage that requires monthly principal payments of $3,000. The mortgage loan matures in 15 years. What should Wagner show on its balance sheet at the end of the current year?

Question

Business

Britney Drake

10 May, 06:28

Wagner Company's financial records show that it has a mortgage that requires monthly principal payments of $3,000. The mortgage loan matures in 15 years. What should Wagner show on its balance sheet at the end of the current year?

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Answers (1)

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Nigel Goodwin · Answer 1

Current Liabilities = $36,000

Non-Current Liabilities = $504,000

Explanation:

Wagner company is expected to show the relevant calculations of the Mortgage in both its current and non-current liability.

Step 1: Calculations for Current Liabilities

Monthly Principal Payments = $3000

Yearly payments = $3,000 x 12 months = $36,000

Based on this calculation, the current liability of Wagner (which shows obligations due within 12 months) will show $36,000 as mortgage principal due within the current year.

Step 2: Calculations for Non-Current Liabilities

Yearly Payment = $36,000

Payment for 15 years = $36,000 x 15 = $540,000

however, since the current year liability is already showing $36,000

The Long term Liability of Wagner will show:

$540,000 - $36,000 = $504,000