Under IFRS, Even If the Entity Plans to Refinance Long-Term

question 6

Multiple Choice

Under IFRS, even if the entity plans to refinance long-term debt, the current portion must be reported as a current liability UNLESS

• A) long-term financing has been completed after the statement of financial position date, but before the financial statements are released.
• B) management intends to refinance the debt on a long-term basis.
• C) at statement of financial position date, the entity expects to refinance under an existing agreement for at least a year, and the decision is solely at its discretion.
• D) management intends to discharge the debt by issuing shares.

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Definitions:

Activity Base

A measure upon which the allocation of costs is based in activity-based costing, often relating to a metric that causes costs to occur such as machine hours or labor hours.

Cost Behavior

The way in which costs change in relation to variations in an organization’s activity level.

Variable Costs

Costs that change in proportion to the level of production or sales, such as raw materials and direct labor.

Activity Level

A measurement of the volume of production or the quantity of services provided.