At December 31, 2010, Burr Corporation owes $500,000 on a note payable due Febru

Question

At December 31, 2010, Burr Corporation owes $500,000 on a note payable due February 15, 2011. (If answer is zero, please enter 0, do not leave any fields blank.)

(a) If Burr refinances the obligation by issuing a long-term note on February 14 and using the proceeds to pay off the note due February 15, how much of the $500,000 should be reported as a current liability at December 31, 2010?

Answer: $

(b) If Burr pays off the note on February 15, 2011, and then borrows $1,000,000 on a long-term basis on March 1, how much of the $500,000 should be reported as a current liability at December 31, 2010?
Answer: $

Explanation / Answer

A) You Report $0. This is because they knew that they where going to issue the other bond to offset the costs on December 31.

B)You would report the $500,000 because you don't have prior knowledge of anything outside the $500,000

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