Generally Accepted Accounting Principles
in the United States

U.S. GAAP Codification Accounting Topics



Short-Term Obligations
Expected to Be Refinanced
(SFAS No. 6)

Principles of AccountingU.S. GAAP Financial Reporting Guide
Accounting by TopicAccounting Terms Dictionary


SFAS No. 6


Statement of Financial Accounting Standards (SFAS) No. 6
        a.  Classification of Short-Term Obligations Expected to Be Refinanced
        b.  Issued in May 1975


SFAS No. 6

 Debts to be refinanced
            are excluded from current liabilities
            only if both of the following conditions are met:

            a.  Company intends to refinance the obligation on a long-term basis.
            b.  Company has the ability to refinance.

 Company has the ability to refinance
            can be supported by one of the following:

            a.  Issuance of long-term debt (or equity securities)
                 after the balance sheet date
                 but before the balance sheet is issued.

            b.  Financing agreement
                 (to refinance short-term debt on a long-term basis)
                 before the balance sheet is issued.

 Financing agreement should satisfy all of the following:
            a.  Within one year (or operating cycle)
                 from balance sheet date
                 --> agreement doe not expire
                 --> agreement is not cancelable by lender

            b.  No violation of provisions
                 --> at the balance sheet date and
                 --> during the period between the balance sheet date and
                       the date balance sheet is issued.

            c.  Lender is financially capable of honoring the agreement.


ARB No. 43, Chapter 3A
     Section A:  Current assets and current liabilities

             Current assets
                 --> assets that are reasonably expected
                       to be realized in cash (or sold or consumed)
                       within one-year or normal operating cycle,
                       whichever is longer.
                      
             Current liabilities
                 --> obligations that are reasonably expected
                       to be liquidated
                       within one-year or normal operating cycle,
                       whichever is longer.

             Funds to be used to pay debts
                 --> Funds to be used for liquidation of long-term debts are
                       excluded from current assets.

                 --> Funds to be used for liquidation of current liabilities are
                       reported as current assets.

             Current liabilities do NOT include:
                 --> debts to be liquidated by funds
                       not classified as current assets.
  




U.S. GAAP Codification
 
Accounting Topics
Inventory Valuation Methods
Depreciation Methods
Revenue Recognition Principle
Accrual Basis vs. Cash Basis Accounting
Basics of Journal Entries
Ratios for Financial Statement Analysis
Overview of Financial Statements


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