Obligations callable at any time by the creditor

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  • #3233904
    TOASTED
    Participant

    Please help with this question:

    Obligations callable at any time by the creditor is a current liability or non current liability?

    Thanks.

    #3240264
    Alvia
    Participant

    “…Such callable obligations are to be classified as current liabilities unless one of the following conditions is met:

    1. The creditor has waived or subsequently lost the right to demand repayment for more than one year (or an operating cycle, if longer) from the balance sheet date.
    2. For long-term obligations containing a grace period within which the debtor may cure the violation, it is probable that the violation will be cured within that period, thus preventing the obligation from becoming callable.”
    SUMMARY OF STATEMENT NO. 78
    https://www.fasb.org/summary/stsum78.shtml#:~:text=Such%20callable%20obligations%20are%20to,from%20the%20balance%20sheet%20date.

    Alvia
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