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Edit View History Bookmarks Window Help com ESPN Yahool gold-soul.la women's swi... .shophearts Cloud Job Description Bing Yahoo Google Wikipedia Face Chapter 13 Homework JWS Transport C Earn Vacation... Chegs mework Exercise 13-13 Current-noncurrent classification of debt [LO13-1, 13-4 At December 31, 2018, Newman Engineering's liabilities include the following 1, S24 million of 6% bonds were issued for $24 million on May 31, 1999. The bonds mature on May 31, 2029 but bondholders have the 2. $28 million of 5% notes are due on May 31, 2022 A debt covenant requires option of calling (demanding payment on) the bonds on May 31, 2019. However, the option to call is not expected to be exercised, given prevailing market conditions Newman to maintain current assets at least equal to On December 31, 2018. Newman is in violation of this covenant. Newman obtained a waiver from National City Bank untl June 2019, having convinced the bank that the company's normal 2 to 1 ratio of curent liabilities will be reestablished during the first half of 2019 were issued for $21 million on August 1. 1989. The bonds mature on July 31, 2019 Sufficient cash is at maturity. Required: mentioned debts as current liablities or noncurrent labilities. Also, provide corresponding value for the same (Enter your answer in millions (i.e.. 10,000,000 should be entered as 10) 2 3. 9 of 15 Next >

Explanation / Answer

1 Current Liability $24 Million Debt maturing in less tha one year or callable by creditors in one year should be Recorded as current liability, whether its not expected to be recalled. 2 Non current liability 28 Million Debt which become immediately payable on vialation of certain conditions should be classified as current liabilities but sinec there is some extention given to rectify the situation withing 6 months, its should be traeted as non current unless the situation is probable to be corrected. 3 Current liabilities 21 Million Since there is no plan of refinancing this debt with long term debt, it should be Classified as current lliabilities because due in less than one year.

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