True or False 1. Stephen Hans had a note payable due on March 1, 2012.On January 31, 2012 before the issuance of the 2011 financial statements, the entity issued long-term bonds payable. Proceeds from...

True or False

1. Stephen Hans had a note payable due on March 1, 2012.On January 31, 2012 before the issuance of the 2011 financial statements, the entity issued long-term bonds payable. Proceeds from the bonds were used to repay the note when it came due. The entity should classify the note payable in the December 31, 2011 financial statements as current liability with separate disclosure of the note refinancing.

2. A contingent liability is not recognized because it is a possible obligation or a present obligation but with an improbable outflow or an outflow that cannot be estimated reliably.

3. The receipt of a grace period from a lender by the reporting period to rectify a breach of a loan covenant ending at least 12 months from reporting period may warrant a noncurrent classification of a debt that would otherwise be presented as current.