Question:
In Merf’s April 30, 2013, balance sheet, a note receivable was reported as a noncurrent asset and the
related accrued interest for eight months was reported as a current asset. Which of the following
descriptions would fit Merf’s receivable classification?
a. Both principal and interest amounts are due on August 31, 2013, and August 31, 2014.
b. Principal is due August 31, 2014, and interest is due August 31, 2013, and August 31, 2014.
c. Principal and interest are due December 31, 2013.
d. Both principal and interest amounts are due on December 31, 2013, and December 31, 2014.
Answer:
b. The principal would have to be due after April 30, 2014, to be considered as a noncurrent asset at
April 30, 2013. The accrued interest for eight months (since August 31, 2012) is a current
asset at April 30, 2013. Since the principal is due August 31, 2014, additional interest would
have to be recorded for the period September 1, 2013 to August 31, 2014.
In Merf’s April 30, 2013, balance sheet, a note receivable was reported as a noncurrent asset and the
related accrued interest for eight months was reported as a current asset. Which of the following
descriptions would fit Merf’s receivable classification?
a. Both principal and interest amounts are due on August 31, 2013, and August 31, 2014.
b. Principal is due August 31, 2014, and interest is due August 31, 2013, and August 31, 2014.
c. Principal and interest are due December 31, 2013.
d. Both principal and interest amounts are due on December 31, 2013, and December 31, 2014.
Answer:
b. The principal would have to be due after April 30, 2014, to be considered as a noncurrent asset at
April 30, 2013. The accrued interest for eight months (since August 31, 2012) is a current
asset at April 30, 2013. Since the principal is due August 31, 2014, additional interest would
have to be recorded for the period September 1, 2013 to August 31, 2014.
