Reference no: EM132718824

Problem 1: Phylonoe, Inc., a company that prepares its financial statements in accordance with IFRS, has a $10,000,000 note payable that comes due on October 1, 20X4. The company has both the ability and the intent to refinance the obligation on a long-term basis. As of December 31, 20X3, it has entered into an agreement with a financial institution that allows it to refinance $4,000,000 for a 24-month period. In addition, it intends to issue a new 20-year $6,000,000 bond in February 20X4 and knows that it will be able to because it has excellent credit and the bond market is very strong. How will Phylonoe report this on their balance sheet at December 31, 20X3?

A. The entire $10,000,000 will be reported as a noncurrent liability because Phylonoe has both the intent and ability to refinance within 60 days of the balance sheet date.

B. $6,000,000 will be reported as a noncurrent liability and the remaining $4,000,000 will be reported as a current liability.

C. $4,000,000 will be reported as a noncurrent liability and the remaining $6,000,000 will be reported as a current liability.

D. The entire $10,000,000 will be reported as a current liability