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### Horngren'S Financial And Managerial Accounting

Book edition 6th
Author(s) Tracie L. Miller-Nobles, Brenda L. Mattison
Pages 992 pages
ISBN 9780134486833

# On January 1, Irving Company purchased equipment of $280,000 with a long-term note payable. The debt is payable in annual installments of$56,000 due on December 31 of each year. At the date of purchase, how will Irving Company report the note payable?

At the time of purchase, $56,000 will be considered as current liability and$224,000 will be considered as long term liability in its balance sheet.

See the step by step solution

## Step-by-step solution

Step 1: Accounting treatment to report the note payable”

Generally, notes payable are long-term but the first installment is due within the 12 months, so first installment should be considered as current liability and rest of the amount be considered as long-term liability.