9. 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 entitys balance sheet?

MICHELLE: Thats easy. Even I know the answer to that question. It would be recorded as a current asset.

NICOLE: Thats 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 FASBs Codification to provide a specific reference for Nicole on her issue.

1) Problem:

a. Determine the proper classification of a deposit on a piece of equipment that is to be purchased within one year on the entity's balance sheet.

b. The key question is how such a deposit should be classified.

2) Keywords: Balance sheet, current assets, classification of current assets, deposit on equipment. ASC 210-10 (correct topic and subtopic. Please help to figure out the correct section(s) and paragraph?