Question

Long-term debts maturing currently should be included as a current liability if they are or will be:

1) converted into capital stock
2) due on demand
3) refinanced with the proceeds of a new debt issue
4) retired by use of noncurrent assets

Answer 1

Long-term debts maturing currently should be included as a current liability if they meet certain conditions such as being converted into capital stock, due on demand, refinanced with the proceeds of a new debt issue, or retired by use of noncurrent assets.

Step-by-step explanation:

Long-term debts maturing currently should be included as a current liability if they are or will be:

1. Converted into capital stock
2. Due on demand
3. Refinanced with the proceeds of a new debt issue
4. Retired by use of noncurrent assets

For example, if a long-term debt is due within the next year, it would be considered a current liability. Similarly, if a long-term debt is refinanced through a new debt issue, it should be classified as a current liability.