Prob 1-5

Current Liability: P3,000,000

The debt should be reported as a current liability because it is payable in the upcoming year and will not
be refinanced in long-term obligations.

Current liability: P6,000,000

The requirement to reclassify currently maturing debt as a current liability includes debt that is callable
by the creditor in the upcoming year – even if the debt is not expected to be called.

Noncurrent liability: P4,000,000

The current liability classification includes situation in which the creditor has the right to demand
payment because an existing violation of a provision of the debt agreement makes it callable unless it is
probable, the violation will be corrected within the grace period. In this case, the existing violation is
expected to be corrected within 6 months and therefore the liability should be classified as noncurrent.

Current liability: P5,000,000

The note payable was refinanced on a long-term basis on January 31,2021 after the end of the current
reporting period. Thus, the note payable should still be classified as current liability.