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Hi sir, could you please help me out with the following question, thank you in advance:
On 1 December 20X6 Pat borrowed $.40,000 at a fixed rate of interest. Single capital repayment is due on 1 December 20X9. During the year to 30 November 20X7, the interest of $.300 per month was paid on the last day of each month. How should the loan be reported on Pat’s Statement of financial position on 30 November 20X7?
Current liability Non-current liability
A $.3,600 $.40,000
B $.40,000 $.3,600
C Nil $.40,000
D $.40,000 Nil
The answer for the question is C. Can you please explain why it cant be A.
The interest of $300 per month was paid so cannot be a liability.
The repayment of the $40,000 is due more 1 year away, so is a non-current liability.