Final answer:
Without additional details about the bond's refinancing plans and accounting standards, it is impossible to determine the precise classification of the current amount for refinancing long-term bonds. The example provided, where a bond's interest rate is lower than the prevailing market rate, indicates that its market value would be discounted, impacting the refinancing conditions.
Step-by-step explanation:
The classification of current amount for refinancing long-term bonds depends on the specific terms and conditions of the bond issue and the prevailing financial accounting standards. Generally, when a company plans to refinance a long-term bond, it may classify the current portion that it intends to refinance into short-term liabilities, assuming it will be paid within the next twelve months. However, the question does not provide sufficient data to ascertain the portion of the bond amount being refinanced in the current period.
Considering the given example, if the local water company planned to refinance its $10,000 ten-year bond at the end of the ninth year, the rate for refinancing needs to be considered in light of the higher prevailing interest rate of 9%. The value of the bond in the market will be less than its face value because of the higher market interest rate compared to the bond's 6% rate. Investors would be reluctant to buy the bond at its face value since new issuances offer a higher return. This discount would affect the bond's refinancing conditions and the amount investors would be willing to pay for it. The classification percentage for the refinancing amount cannot be definitively determined without additional information about the company's refinancing plans and the accounting standards applied.