Reference no: EM133077012

Question - Windex Company provided the following schedule of liabilities on December 31, 2021:

Accounts Payable 6,500,000 Bank Note Payable-10% 3,000,000

Bank Note Payable-11% 5,000,000 Interest Payable 150,000

Mortgage Note Payable-10% 2,000,000 Bonds Payable 4,000,000

The 3,000,000 10% note was issued March 1, 2021, payable on demand. Interest is payable every six months.

The one-year 5,000,000 11% note was issued January 15, 2021. On December 31, 2021, Windex Company negotiated a written agreement with the bank to replace the note with a 2-year, 5,000,000 10% note to be issued January 15, 2022.

The 10% mortgage note was issued October 1, 2018, with a term of 10 years. Terms of the note give the holder the right to demand immediate payment if the entity fails to make a monthly interest payment within 10 days from the date the payment is due. On December 31, 2021, Windex Company is three months behind in making its required interest payment.

The bonds payable is ten-year, 8% bonds, issued June 30, 2012. Interest is payable semi-annually on June 30 and December 31.

Required -

1. What is the classification of the following debt instruments in the statement of financial position of Windex Company as of December 31, 2021? Explain each with reliable basis.

a. 3,000,000 Bank Note payable, 10%

b. 5,000,000 Bank Note payable, 11%

c. Mortgage Note payable, 10%

d. Bonds Payable

2. Considering all of the debt instruments, what amount should be reported as current and noncurrent liabilities respectively?

3. What are the requisites stated in PAS 1 in order for a debt instrument to be classified as current? How about non-current?