Classification of serial maturities;

              Bulletin HASKINS & SELLS 67
Classification of Serial Maturities
DE B A T A B L E questions are sometimes
said to provide some of the spice of
technical procedure in accountancy. As
one looks over the list of such questions
there are many which appear to be possible
of settlement through the application of
refined classification. In fact, most of the
questions of classification probably may be
settled by sufficient consideration of the
variable factors which affect the problems
and corresponding refinement in providing
for the conditions to which variation gives
rise.
One of the outstanding questions of
classification involves serial maturities of
funded or long term debts. The present
somewhat marked tendency of so arranging
bond and note issues that the maturities
will be spread over a period of years, fur­nishes
the occasion for considerable atten­tion
from time to time to this matter. The
question at issue is when, if ever, ma­turing
installments should be included
among the current liabilities. This is
a matter which obviously has consider­able
bearing on the current ratio, and
may distinctly affect the current position
of a company depending on whether
this installment about to mature is or is
not included as a current liability.
The classification prescribed by the
Interstate Commerce Commission, which
has served as a substantial basis for much
of the legislation affecting accounting,
deals with funded debt maturing, as
follows:
"There shall be included in this account
the total par value of unmatured debt matur­ing
more than two years from date of issue,
issued by the accounting company and not
retired or cancelled. * * * "
This provision is so interpreted and
applied that debts maturing one day after
a balance sheet date are held to mature as
of the balance sheet date, while maturities
falling on the second day following a
balance sheet date are considered to have
fallen without the period closed by the
date at which the balance sheet is pre­pared.
In other words, in a case where the
balance sheet is of December 31, and the
question is one of deciding, under the pro­visions
of this section, whether or not a
maturity debt should be classified as un­matured
or matured, if the date of maturity
falls on January 1, the obligation is re­garded
as having matured December 31.
If the date falls on January 2, the debt, for