1. Topic: Current Assets

Michelle: How did you do on that accounting exam?

Nicole: I just missed a "B" by two points.

Michelle: At least you passed the exam!

Nicole: I know. But I was hoping for a higher grade since I studied so hard for this exam.

Michelle: Maybe there were some questions that the professor graded wrong.

Nicole: I agree. We had one question that asked, "How should a deposit on a piece of equipment that is to be purchased within one year be classified on the entity's balance sheet?"

Michelle: That's easy. Even I know the answer to that question. It would be recorded as a current asset.

Nicole: That's exactly how I answered the question, and it was graded wrong.

Michelle: You need to go to the professor and tell him that the grading guide is in error.

Nicole: Before I do that, I want to be sure of the answer.

Required: Utilize the FASB's Codification to provide a specific reference for Nicole on her issue.