Recalculate the split between current and non-current liabilities: allocation, classification, and presentation.
Inspect the loan agreement for restrictive covenants (terms) and determine the effect of any loan covenant breaches: allocation, classification, presentation.
dear tutor, can you explain how allocation and classification are applied in the two scenarios?
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allocation and classification
I will answer your two posts of today but you MUST comply with the Forum Rules and with the emails from John Moffat yesterday.
It would help you to help yourself greatly if you refer to the notes:
Classification - means in proper (ledger) a/cs - transactions and balances
Presentation - means in FS - transactions and balances
allocation - is an aspect of "Accuracy, valuation and allocation" - relates only to balances. It's a particular aspect of valuation - e.g. deprecation of plant and equipment (a factor overhead) may be allocated to inventory (IAS 2).
I don't think allocation has anything to do with either scenario. And I think presentation (as current/non-current) is correct rather than classification. The current/non-current portions of liabilities are presented separately in the FS (IAS 1) - but they are not split between separate accounts in the ledger.
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