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Indicate whether each of the following assets and liabilities should be classified as current or noncurrent:

(a) accounts receivable
(b) prepaid rent for the next six months
(c) note receivable due in two years
(d) not payable due in 90 days
(e) note payable due in five years
(f) patent

User Maryline
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1 Answer

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Final answer:

Accounts receivable is a current asset, prepaid rent is a current asset, note receivable is a noncurrent asset, note payable is a current liability, note payable is a noncurrent liability, and the classification of a patent depends on its useful life.

Step-by-step explanation:

(a) Accounts receivable: Accounts receivable should be classified as a current asset since they are expected to be collected within one year.

(b) Prepaid rent for the next six months: Prepaid rent should also be classified as a current asset since it will be used up or expired within one year.

(c) Note receivable due in two years: Note receivable should be classified as a noncurrent asset since it is not expected to be collected within one year.

(d) Note payable due in 90 days: Note payable should be classified as a current liability since it is expected to be paid within one year.

(e) Note payable due in five years: Note payable should be classified as a noncurrent liability since it is not expected to be paid within one year.

(f) Patent: The classification of a patent depends on its expected useful life. If the patent has a useful life of less than one year, it should be classified as a current asset. If the patent has a useful life of more than one year, it should be classified as a noncurrent asset.

User Javiel
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