On December 31, 2023, Zimmer Corporation has $7.9 million of short-term debt in the form of notes payable that are due in 2024 to Provincial Bank. On January 28, 2024, Zimmer enters into a refinancing agreement with the bank that permits it to refinance its debt by up to 60% of the gross amount of its accounts receivable. Receivables are expected to range between a low of $5.7 million in February and a high of $7.0 million in October during 2024. The interest cost of the maturing short-term debt is 15%, and the new agreement calls for a fluctuating interest rate at 1% above the prime rate (currently prime is 8%) with the notes due in 2025. Zimmer informed the bank that it wishes to refinance as much of its debt as possible prior to its December 31, 2023 balance sheet being issued on February 15, 2024.

Instructions

a. Assuming that Zimmer follows ASPE, prepare a partial balance sheet for Zimmer at December 31, 2023, that shows how its $7.9 million of short-term debt should be presented, including any necessary note disclosures.

b. Assuming that Zimmer follows IFRS, explain how the $7.9 million of short-term debt should be presented on the December 31, 2023 SFP.