13.9 Increasing-Rate Debt
ASC 470-10
45-7
Classification of increasing-rate debt as current or
noncurrent would reflect the borrower’s anticipated source
of repayment that is, current assets or a new short-term
debt borrowing versus a long-term refinancing agreement that
meets the requirements of this Subtopic and need not be
consistent with the time frame used to determine periodic
interest cost.
The manner in which increasing-rate extendable debt is classified as current or
noncurrent is not necessarily consistent with how periodic interest cost is
determined under ASC 470-10-35-1 and 35-2 (see Section
6.2.4.5). Rather, increasing-rate extendable debt should be
classified as current or noncurrent on the basis of the same general guidance in ASC
470-10 that applies to all other debt instruments. The debtor may therefore need to
consider whether a refinancing arrangement meets the requirements in ASC
470-10-45-14 (see Section 13.7).