[icediamek]

The cost of the building is $120,000. The terms of the mortgage require $1,000 per month mortgage payments for the next 10 years. (Ignore mortgage interest)

Company A makes its mortgage payments each month on time. At the end of the year all 12 payments have been made on the mortgage liability.

On December 31, 2012, As Company A’s accountant, you prepare a “classified” balance sheet.

How would you reflect the building and the mortgage liability on the classified balance sheet?

[pready]

The liability needs to be broken down into 2 parts; one is the portion that will be paid in the next year or accounting cycle, which is known as Current portion due and the other part will be a Long-Term liability.