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Problem 1-5 (IAA) On December 31, 2020, Cordillera Company reported the following liabilities: Note payable - 9% 3,000,000 Note payable - 8% 6,000,000 Note payable - 10% 4.000,000 Note payable - 11% 5,000,000 The 9% note payable is noncancelable and matures on July 31, 2021. Sufficient cash is expected to be available to retire the note at maturity. The 8% note payable matures on May 31, 2026 but the creditor has the option of calling the note or demanding payment on June 30, 2021. However, the call option is not expected to be exercised given the prevailing market condition. The 10% note payable is due on March 31, 2022. A debt covenant requires Cordillera Company to maintain current assets at least equal to 150% of current liabilities. On December 31, 2020, Cordillera Company is in violation of this covenant. However, Cordillera Company obtained a waiver from the creditor until June 2021 having convinced the creditor that Cordillera's normal 2 to 1 ratio of current assets to current liabilities will be reestablished during the first half of 2021. The 11% note payable matures on June 30, 2021. On January 31. 2021 before the issuance of the 2020 financial statements. the note payabe was refinanced on a long-term basis. Required: Explain the appropriate classification of the notes payable as current or noncurrent in the statement of financial position on December 31, 2020. 17