A fellow accountant came to you for advice regarding the classification of short-term obligations

repaid prior to being replaced by a long-term security. Demeter Foods issued P50,000,000 of

short-term commercial paper during 2021 to finance construction of a plant in Nueva Vizcaya. At

September 30, 2022, Demeter's financial year-end, the company intends to refinance the

commercial paper by issuing long-term bonds to the holders of the commercial paper. However,

because Demeter temporarily has excess cash, in November 2022 it liquidates P20,000,000 of

the commercial paper as the paper matures. In December 2022, the company completes a

P100,000,000 long-term bond issue. Later during December, it issues its September 30, 2022,

financial statements. The proceeds of the long-term bond issue are to be used the P20,000,000

in working capital, to pay P30,000,000 of commercial paper as it matures in January 2023, and

to pay P50,000,000 of construction costs expected to be incurred later to complete the plant.

You initially are hesitant because you don't recall encountering such a situation. You also do not

recall a specific IFRS pronouncement that deals with the issue. However, you are encouraged by

remembering that this general topic is covered by an IASB pronouncement to which you have

access: "Presentation of Financial Statements," International Accounting Standard No. 1 (London,

UK: IASB, 2010)

Required:

Determine how the P50,000,000 of commercial paper should be classified by consulting the IASB

pronouncement. Before doing so, formulate your own opinion on the proper treatment