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How much would be classified as current liability

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On November 1, Year 6, Bob the Builder purchases a lottery ticket after having a dream in which a stranger gave him a giant fortune cookie. A week later, he finds out that he won $1,000,000. On December 1, Year 6, he cashes in his lottery ticket and forms a corporation called Fortune Cookie Inc. (FCI, hereafter) with his lottery money. When FCI is formed, there is no other assets or liabilities.

From the formation of FCI to the end of Year 10, the following transaction is the only transaction that has happened:

FCI issues an installment note on March 1, Year 7 (with a required yield of 6%) in exchange for the commercial building that it purchases from Mr. Mac. The note calls for three equal blended payments of 680,000 that are to be made at March 1, Year 8, Year 9, and Year 10. Note that FCI's fiscal year end is December 31.

Problem (1) Out of the total liability at December 31, Year 7, how much would be classified as current liability?

Reference no: EM132835348

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