How to determine the amount of the notes payable reported

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Question 1: For each of the following cases, determine the amount of the notes payable reported as current and non- current at December 31, 2015.

Case 1

Taft, Inc. has P3 million of notes payable due June 15, 2016. At December 31, 2015, Taft signed an agreement to borrow up to P3 million to refinance the notes payable on a long-term basis. The financing agreement called for borrowings not to exceed 80% of the value of the collateral Taft was providing. At the date of issue of the December 31, 2015 financial statements, the value of the collateral was P3.6 million and was not expected to fall below this amount.

Case 2

Taft, Inc. has P2 million of notes payable due June 15, 2016. At February 15, 2016, Taft signed an agreement to borrow up to P2 million to refinance the notes payable on a long-term basis. The financing agreement called for borrowings not to exceed 80% of the value of the collateral Taft was providing. The value of the collateral was P2.4 million and was not expected to fall below this amount. The financial statements are authorized for issuance on March 5, 2016.

Reference no: EM132578459

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