The company has a note receivable of 150,000 that has accidentally been classified as a current asset but should have been classified as a long term-asset. This would mean a reclassification. During an audit of the company, the engagement team concluded a waiver of this reclassification is appropriate. Is this accurate? why or why not? how does this misstatement affect the company?

 

Cash Accounts receivable Inventory Prepaid insurance Note receivable subcontractor Contract assets Total current assets Accounts payable Other accrued liabilities Contract liabilities Line of credit bank Total liabilities 50,000 750,000 25,000 31,000 150,000 650,000 1,656,000 550,000 20,000 58,000 200,000 828,000