which of the following is not a preparer s responsibility for a client s return 613525

Current vs. non-current liabilities

On Dec 31, 01, the remaining time to maturity of a loan taken up by entity E is 18 months. E”s normal operating cycle is 12 months.

Required

Assess for each of the following versions, whether the liability has to be classified as current or as non-current in E”s statement of financial position as at Dec 31, 01:

(a) No further events took place with regard to the liability.

(b) On Dec 31, 01, E breaches a covenant under which E is required to maintain a certain equity ratio. This breach entitles the lender to demand immediate repayment of the entire loan. Irrespective of the breach, the lender declares on Jan 03, 02 its willingness not to exercise the right of immediate repayment and not to change the terms of the loan. However, the right of the lender to demand immediate payment does not expire due to the declaration.

(c) The situation is the same as in (b). However, the lender declares its willingness not to exercise the right of immediate repayment and not to change the terms of the loan on Dec 31, 01, i.e. before the end of the reporting period.

(d) The situation is the same as in (b). However, on Jan 05, 02, the lender signs an agreement in which it waives its right to demand immediate repayment of the entire loan.

(e) The situation is the same as in (d). However, the agreement described in (d) is signed on Dec 31, 01.