Question
A loan is due to be repaid in 18 months from the reporting date. On a classified statement of financial position, this loan is presented as:
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 1 — current/non-current distinction
Every asset and liability is classified current or non-current on the basis of the operating cycle and the twelve-month test. Work down the trial balance classifying each item first, and total only once the classification is settled.
Common mistakes
- Leaving the current portion of a long-term borrowing inside non-current liabilities.
- Classifying a prepayment covering more than a year entirely as current.
- Reporting an asset at gross amount where a contra account should reduce it.
Further readingPreparing a balance sheet step by step