Question

abc has a $5 million liability at december 31, 2018, of which $1 million is payable in each of the next five years. abc reports the liability on the balance sheet as a:

Answer 1

abc  should reports the liability on the balance sheet as a: $1 million current liability and a $4 million long-term liability.

Liability

The liability will appear in the balance sheet as:

Current liability (Payable)= $1 million

Long term liability=$5 million-$1 million

Long term liability=$4 million

Therefore abc  should reports the liability on the balance sheet as a: $1 million current liability and a $4 million long-term liability.

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