Refinancing of short-term debt

Prior to the issuance of Financial Accounting Standards Board (FASB) Statement No. 6, short-term obligations that management intended to refinance on a long-term basis were generally required to be classified as current liabilities. FASB No. 6 contends that management intent must be demonstrated by either a post-balance-sheet-date issuance of long-term obligations or equity securities or through the presence of a financing agreement.If the amount of the long-term obligations or equity securities issued is greater than or equal to the amount of the short-term obligations refinanced, all of the short-term obligation should be reclassified. However, if the amount of the security issuance is less than the short-term obligation, the reclassification should be limited to the security issuance, with the excess classified as a current liability.