Bull Arm Company has the following itemas at December 31 Yr 1: $200,000, 5 percent note payable due March 15, Yr 2. The company has reached an agreement with the bank to refinance the note for two years, but the refinancing has not yet been approved. $1,000,000, 4 percent bonds payable, due December 31, Year 5. The compnay has violated an agreement with the bondholders to maintain a minimum balance in retained earngings, which causes the bonds to come due on January 31, Year 2. $50,000 overdraft on a bank account. Overdrafts are a normal part of the company’s cas management plan.
Related to these items, what amount should Bull Arm Company report as current liabilities on its December 31, Year 1 balance sheet based on IFRS? I know the answer is $1,200,000. Can someone explain the answer.
