Question

Region Jet has a $68 million liability at December 31, 2021, of which $14 million is payable in 2022. In its December 31, 2021 balance sheet, the company reports the $68 million debt as a:________
a) $54 million current liability and a $14 million long-term liability in the balance sheet
b) $68 million long-term liability in the balance sheet.
c) $68 million current liability in the balance sheet
d) $14 million current liability and a $54 million long-term liability in the balance sheet.

Answer 1

Answer:

The answer is D.

Explanation:

Current liability is the obligation or liability that are due within a year(12months). Example, accounts payable

Long-term liability is the obligation that has a life span of more than a year(i.e it takes more than a year to settle them). Example, bonds.

The opening balance for debt January 1 2022 is $68 million.

$14 million is a curren asset asset because it will be repaid within 2022 calendar year(within a year) while $54million($68 million - $14million) will definitely be a long-term liability.