How to split the financial liability into current & non-current element?

AGAccount guy5y ago

I am using Kaplan study text and I am trying to understand this. After spliting the financial liability into current & non-current element in compound instrument Q'. After calculating the equity element as the difference between the liability element & loan proceeds then I calculate the amortised cost to get the Balance c/f at the each year-end as such: Year Bal b/f Finance costs cash paid Bal c/f 1 4228 338 (100) 4466 2 4466 357 (100) 4723 3 4723 377 (100) 5000 Now, the kaplan classify the current & non-current as like this: Non-current liability: Financial liability 4466(yr1) 4723(yr2) Current liability: Financial liability 5000(yr3) I don't know why it is classify AS SUCH... If I were to do this I would have done something like this: Non-current liability: Financial liability 4723(yr2) 5000(yr3) Current liability: Financial liability 4466(yr1) PLEASE EXPLAIN THIS TO ME!!!

P2-D2Tutor5y ago#1

Hi, The debt is not due to be repaid until the end of the third year so in years one and two the financial liability is non-current. When the debt gets to the end of the third year it will then be current as it will be paid at the start of the next year. Thanks