Assertion (A) : Bank loan which will repay after one year will come under long-term liability. Reason (R) : Bank loan which will repay after one year will come under non-current liability.
Answers
Explanation:
Long-term liabilities are listed in the balance sheet after more current liabilities, in a section that may include debentures, loans, deferred tax liabilities, and pension obligations. Long-term liabilities are obligations not due within the next 12 months or within the company’s operating cycle if it is longer than one year. A company’s operating cycle is the time it takes to turn its inventory into cash.
An exception to the above two options relates to current liabilities being refinanced into long-term liabilities. If the intent to refinance is present and there is evidence that the refinancing has begun, a company may report current liabilities as long-term liabilities because after the refinancing, the obligations are no longer due within 12 months.