Consider the following liabilities of Future Brands, Inc., at December 31, 2024, the company’s fiscal year-end. Should they be reported as current liabilities or long-term liabilities?

1. $77 million of 8% notes are due on May 31, 2028. The notes are callable by the company’s bank, beginning March 1, 2025.

2. $102 million of 8% notes are due on May 31, 2029. A debt covenant requires Future to maintain a current ratio (ratio of current assets to current liabilities) of at least 2 to 1. Future is in violation of this requirement but has obtained a waiver from the bank until May 2025, since both companies feel Future will correct the situation during the first half of 2025.