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Thank you for a great lecture Mike. Could you please explain how the current liabilities and long term liability is calculated ? i am a bit confused about it, how come the log term liability is the remainder amount at the end of year 2 and current the difference between year 2 and year 1. what is the logic as we are preparing the financial statement as at the end of year 1 as per question? Thank you in advance
If we can calculate the capital amount outstanding at the end of year 2, and we know the capital amount at the end of year 1, then we can work out the current liability by deducting year 2 from year 1.
And at the same time, we have calculated the long term liability to show in deferred liabilities.
OK?
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