Question:
Access the FASB’s Codification Research System at the FASB website ( www.fasb.org ). Determine the
specific citation for each of the following items:
1. What is the balance sheet classification for a note payable due in six months that was used to purchase
a building?
2. Which assets may be excluded from current assets?
3. Should a note receivable from a related party be included in the balance sheet with notes receivable or
accounts receivable from customers?
4. What items are nonrecognized subsequent events that require a disclosure in the notes to the financial
statements?
Answer:
The FASB Accounting Standards Codification represents the single source of authoritative
U.S. generally accepted accounting principles. The specific citation for each of the following
items is:
1. What is the balance sheet classification for a note payable due in six months that
was used to purchase a building?
FASB ASC 210–10–45–9: “Notes to Financial Statements–Overall–Other Presentation
Matters–Other Liabilities.”
Other liabilities whose regular and ordinary liquidation is expected to occur within a
relatively short period of time, usually 12 months, are also generally included, such as the
following:
a. Short-term debts arising from the acquisition of capital assets.
, b. Serial maturities of long-term obligations.
c. Amounts required to be expended within one year under sinking fund provisions.
d. Agency obligations arising from the collection or acceptance of cash or other assets
for the account of third persons. Loans accompanied by pledge of life insurance policies
would be classified as current liabilities if, by their terms or by intent, they are to be
repaid within 12 months. The pledging of life insurance policies does not affect the
classification of the asset any more than does the pledging of receivables, inventories,
real estate, or other assets as collateral for a short-term loan. However, when a loan on a
life insurance policy is obtained from the insurance entity with the intent that it will not
be paid but will be liquidated by deduction from the proceeds of the policy upon maturity
or cancellation, the obligation shall be excluded from current liabilities.
2. Which assets may be excluded from current assets?
FASB ASC 210–10–45–4: “Notes to Financial Statements–Overall–Other Presentation
Matters.”
The concept of the nature of current assets contemplates the exclusion from that
classification of such resources as the following:
Access the FASB’s Codification Research System at the FASB website ( www.fasb.org ). Determine the
specific citation for each of the following items:
1. What is the balance sheet classification for a note payable due in six months that was used to purchase
a building?
2. Which assets may be excluded from current assets?
3. Should a note receivable from a related party be included in the balance sheet with notes receivable or
accounts receivable from customers?
4. What items are nonrecognized subsequent events that require a disclosure in the notes to the financial
statements?
Answer:
The FASB Accounting Standards Codification represents the single source of authoritative
U.S. generally accepted accounting principles. The specific citation for each of the following
items is:
1. What is the balance sheet classification for a note payable due in six months that
was used to purchase a building?
FASB ASC 210–10–45–9: “Notes to Financial Statements–Overall–Other Presentation
Matters–Other Liabilities.”
Other liabilities whose regular and ordinary liquidation is expected to occur within a
relatively short period of time, usually 12 months, are also generally included, such as the
following:
a. Short-term debts arising from the acquisition of capital assets.
, b. Serial maturities of long-term obligations.
c. Amounts required to be expended within one year under sinking fund provisions.
d. Agency obligations arising from the collection or acceptance of cash or other assets
for the account of third persons. Loans accompanied by pledge of life insurance policies
would be classified as current liabilities if, by their terms or by intent, they are to be
repaid within 12 months. The pledging of life insurance policies does not affect the
classification of the asset any more than does the pledging of receivables, inventories,
real estate, or other assets as collateral for a short-term loan. However, when a loan on a
life insurance policy is obtained from the insurance entity with the intent that it will not
be paid but will be liquidated by deduction from the proceeds of the policy upon maturity
or cancellation, the obligation shall be excluded from current liabilities.
2. Which assets may be excluded from current assets?
FASB ASC 210–10–45–4: “Notes to Financial Statements–Overall–Other Presentation
Matters.”
The concept of the nature of current assets contemplates the exclusion from that
classification of such resources as the following:
