STATEMENT OF FINANCIAL

POSITION

ACCO 6

FRANQUE SIENA-AN MARINO-MATA, CPA, MBA

 STATEMENT OF FINANCIAL POSITION A
STATEMENT OF FINANCIAL POSITION MAY BE
PRESENTED AS EITHER:
1. CLASSIFIED (CURRENT/NON-CURRENT DISTINCTION) – SHOWING CURRENT
AND NONCURRENT ASSETS AND LIABILITIES, OR

2. 2. UNCLASSIFIED (BASED ON LIQUIDITY) – SHOWING NO DISTINCTION

BETWEEN CURRENT AND NONCURRENT ITEMS
 CURRENT ASSETS
AN ENTITY SHALL CLASSIFY AN ASSET AS CURRENT WHEN:
1. IT EXPECTS TO REALIZE THE ASSET OR INTENDS TO SELL OR CONSUME IT, IN
ITS NORMAL OPERATING CYCLE;
2. IT HOLDS THE ASSET PRIMARILY FOR THE PURPOSE OF TRADING;
3. IT EXPECTS TO REALIZE THE ASSET WITHIN TWELVE MONTHS AFTER THE
REPORTING PERIOD; OR
4. THE ASSET IS CASH OR A CASH EQUIVALENT UNLESS THE ASSET IS
RESTRICTED FROM BEING EXCHANGED OR USED TO SETTLE A LIABILITY FOR
AT LEAST TWELVE MONTHS AFTER THE REPORTING PERIOD.
 CURRENT LIABILITIES

AN ENTITY SHALL CLASSIFY A LIABILITY AS CURRENT WHEN:

1. IT EXPECTS TO SETTLE THE LIABILITY IN ITS NORMAL OPERATING CYCLE;
2. IT HOLDS THE LIABILITY PRIMARILY FOR THE PURPOSE OF TRADING;
3. THE LIABILITY IS DUE TO BE SETTLED WITHIN TWELVE MONTHS AFTER THE
REPORTING PERIOD; OR
4. THE ENTITY DOES NOT HAVE AN UNCONDITIONAL RIGHT TO DEFER
SETTLEMENT OF THE LIABILITY FOR AT LEAST TWELVE MONTHS AFTER THE
REPORTING PERIOD.
 CURRENTLY MATURING LONG-TERM
LIABILITIES

GENERAL RULE: CURRENTLY MATURING LONG-TERM LIABILITIES ARE PRESENTED

AS CURRENT LIABILITIES.
EXCEPTIONS:
1. REFINANCING AGREEMENT FULLY COMPLETED ON OR BEFORE THE BALANCE
SHEET DATE – NON-CURRENT LIABILITY
2. REFINANCING AGREEMENT AFTER THE BALANCE SHEET DATE BUT BEFORE
THE FINANCIAL STATEMENTS ARE AUTHORIZED FOR THE ISSUE – NON-
CURRENT LIABILITY IF THE REFINANCING IS AT THE DISCRETION OF THE
ENTITY.
 BREACH OF LOAN AGREEMENT

GENERAL RULE: A LIABILITY THAT IS PAYABLE ON DEMAND IS A CURRENT

LIABILITY.
EXCEPTION:
IT IS PRESENTED AS A NON-CURRENT LIABILITY IF THE LENDER PROVIDES THE
ENTITY, ON OR BEFORE THE BALANCE SHEET DATE, A GRACE PERIOD ENDING AT
LEAST 12 MONTHS AFTER THE BALANCE SHEET DATE TO RECTIFY A BREACH OF
LOAN COVENANT.
 PRESENTATION OF DEFERRED TAXES

DEFERRED TAX LIABILITIES (ASSETS)

SHALL BE PRESENTED AS NONCURRENT ITEMS IN A CLASSIFIED STATEMENT OF
FINANCIAL POSITION, IRRESPECTIVE OF THEIR EXPECTED DATES OF REVERSAL.
EQUITY- SHAREHOLDERS’ EQUITY
EQUITY-WORKING CAPITAL
1. HOW MUCH IS THE WORKING CAPITAL?
2. WHAT IS THE CURRENT RATIO?
DETERMINE THE FOLLOWING:
1. TOTAL EQUITY AS OF 12/31/2023
2. WORKING CAPITAL AS OF 12/31/2023
3. CURRENT ASSETS AND CURRENT LIABILITIES AS OF 12/31/2023