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28 October, 17:52

Wagner Company's financial records show that it has a mortgage that requires monthly principal payments of $3,000. The mortgage loan matures in 15 years. What should Wagner show on its balance sheet at the end of the current year?

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  1. 28 October, 19:09
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    Current Liabilities = $36,000

    Non-Current Liabilities = $504,000

    Explanation:

    Wagner company is expected to show the relevant calculations of the Mortgage in both its current and non-current liability.

    Step 1: Calculations for Current Liabilities

    Monthly Principal Payments = $3000

    Yearly payments = $3,000 x 12 months = $36,000

    Based on this calculation, the current liability of Wagner (which shows obligations due within 12 months) will show $36,000 as mortgage principal due within the current year.

    Step 2: Calculations for Non-Current Liabilities

    Yearly Payment = $36,000

    Payment for 15 years = $36,000 x 15 = $540,000

    however, since the current year liability is already showing $36,000

    The Long term Liability of Wagner will show:

    $540,000 - $36,000 = $504,000
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