The “Questions and Answers Technical Hotline” in the Journal of Accountancy included the following question:
Several years ago, Company B instituted legal action against Company A. Under a memorandum of settlement and agreement, Company A agreed to pay Company B a total of $17,500 in three installments–$5,000 on March 1, $7,500 on July 1, and the remaining $5,000 on December 31. Company A paid the first two installments during its fiscal year ended September 30. Should the unpaid amount of $5,000 be presented as a current liability at September 30?
How would you answer this question?