You have recorded a revolving line of credit on your company's financial statements due within the next ten months as a long-term liability.The board of directors of the company has asked you to explain why you have done so.The company has been in default with its loan covenants, but prior to the issuance of the financial statements, the bank granted a waiver.

With reference to the above scenario, answer the following questions in two paragraphs each.

1. What is a line of credit?

2. What promulgated accounting literature would your use to support your rationale described in your scenario?

3. What criteria should be met prior to reflecting this loan as a long-term liability?