Practice prompt · Q:current-liabilities-refinancing-and-contingencies/current-maturity-classification-001

Classify the next twelve months of a term loan

Tests whether the learner splits a long term borrowing into its current and noncurrent portions at the reporting date.

Updated Sep 11, 2026 Review due Nov 18, 2026

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A five-year term loan has an outstanding principal of 750,000 at December 31. It amortizes in equal principal instalments of 37,500 each quarter, with the next instalment due March 31. No refinancing agreement exists.

The classification is redone every reporting date. A borrowing drifts from noncurrent into current one instalment at a time, and the working capital effect arrives with it.

Choose the best answer. a Current liability 150,000 and noncurrent liability 600,000. b Current liability 37,500 and noncurrent liability 712,500. c Current liability 750,000, because the loan is in its final period. d Noncurrent liability 750,000, because the loan was originally a five-year borrowing.

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Answer: a

Choice a. Four instalments of 37,500 mature within twelve months, so 150,000 is current and 600,000 is noncurrent.