Reference no: EM132746290

At December 31, 2014, Kuya's liabilities include the following:

a. During December 2014, Kuya received Php 75,000 from Ate, a customer, as an advance payment for a handicraft that Kuya will make to Ate's specifications. From this transaction, Kuya has a Php 75,000 credit balance in its accounts receivable from Bunso at December 31, 2104

b. Php 10,000,000 of 10% bonds were issued at face value on June 30, 1995. The bonds mature on June 30, 2024, but bondholders gave the option to call the bonds on June 30, 2015. However, the call option is not expected to be exercised, given prevailing market conditions.

c. Php 10,000,000 of 10% notes are due on March 31, 2019. The financing agreement contains a covenant that requires Kuya to maintain current assets at least equal to 200% of its current liabilities. As of December 31, 2014, Kuya has breached this loan covenant. On February 10, 2015 before Kuya financial statements are authorized for issue, Kuya obtained a period of grace from Mayumi bank until January 31, 2016, having convinced the bank that the company's normal 3 to 1 ratio of current assets to current liabilities will be reestablished during 2015.

d. Php 15,000,000 of noncancelable 12% bonds were issued at face value on September 30, 1993. The bonds mature on August 31, 2015. Kuya expects to have sufficient cash available to redeem the bonds at maturity.

Required:

Problem 1. What portion of Kuya Company should be reported as a noncurrent liability?