PROBLEM 1-5

Current Liability: P 3,000,000

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

Current liability: P 6,000,000

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

Non-current liability; P4,000,000

-The current liability classification includes the 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 violations 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 non current.

Current liability:P5,000,000
-the notes payable was refinanced on a long-term basis on January 31 2021 after the
end of the current reporting period. Thus, the notes payable should be classified as
current liability.