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How much is presented as part of the current liabilities

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On January 01, 2020, Tokwa Co. availed a 3-year, P 2,000,000 loan from a bank. The loan agreement requires Tokwa to maintain a current ratio of 2:1. If the current ratio falls below 2:1, the loan becomes payable on demand. As of December 31, 2020, Tokwa's current ratio is 1.8:1. On January 05, 2021, the bank agreed not to collect the loan in 2021 and gave Tokwa 12 months to rectify the breach of the loan agreement.

Problem 1: How much is presented as part of the current liabilities in relation to the loan in Tokwa's 2020 year-end financial statements?

A. 2,000,000
B. 200,000
C. 100,000
D. 0

Reference no: EM132869301

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