You are beginning the 2016 audit of Alta Companys long term debt and you determine that the companys long term note payable requires that it comply with certain financial covenants. The note payable is dated January 1, 2013, has a face value of $1,000,000 is due December 31, 2022, and is held by First Bank of Detroit. The note payable is dated January 1, 2013, has a face value of $1,000,000, is due December 31, 2022, and is held by First Bank of Detroit. The note payable requires that Alta maintain a minimum current ratio of 1.25, and any violation of the covenant allows the lender to call the debt. You find that Altas year end current ratio is 1.1. Altas Chief Financial Officer, Ralph Fine, informs you that the company is in violation of the debt covenant but has been granted a waiver by First Bank of Detroit, so there are no consequences to the violation. The waiver allows Alta 90 days from year end to increase its current ratio above 1.25. Your audit partner believes that the violation is an issue and is concerned that the long term debt must be reclassified as current. Research the related generally accepted accounting principles and prepare a short memo not to exceed two pages to your audit partner that answers whether the long term debt should be reclassified. Cite your references and applicable paragraph numbers. How would your answer change if First National Bank of Detroit granted a 15 month waiver as opposed to a 90-day waiver? How would your answer change if Alta met the 2016 year end covenant, but it was probable that the first quarter 2017 current ratio covenant would be violated? Cite your references and applicable paragraph numbers.

What is the FASB codification?