Final answer:
To determine the proper classification of assets as current or noncurrent on a balance sheet, consider their expected time frame of use or realization. Examples of current assets include cash, accounts receivable, and inventory, while examples of noncurrent assets include property, plant, and equipment, and long-term investments.
Step-by-step explanation:
In order to determine the proper classification of items as current or noncurrent assets on a balance sheet as of December 31, you need to consider the nature and expected time frame of their use or realization. Current assets are those that are expected to be consumed or converted into cash within one year or the normal operating cycle of the business, whichever is longer. Noncurrent assets, also known as long-term assets, are those that are expected to provide economic benefits for more than one year or beyond the normal operating cycle.
Examples of current assets include cash, accounts receivable, and inventory, while examples of noncurrent assets include property, plant, and equipment, and long-term investments.
It is important to review each item separately and assess its characteristics in order to make the proper classification on the balance sheet.