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4. Depending on the circumstances, the classification of a compensating balance may be either current or noncurrent, and the arrangement should be disclosed in the notes.
o True
o False

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Depending on the circumstances, the classification of a compensating balance may be either current or noncurrent, and the arrangement should be disclosed in the notes true.

A compensating stability is a minimal stability that have to be maintained in a financial institution account, and the compensating stability is used to offset the fee incurred through a financial institution to installation an enterprise loan. Cash have to be segregated if it's far held as a compensating stability.

According to the​ SEC, if the compensating balances are legally​ restricted, the coins held as a compensating stability have to be proven as a separate line object from unrestricted coins withinside the cutting-edge belongings segment of the stability sheet. A compensating stability is a minimal deposit that have to be maintained in a financial institution account through a borrower. The requirement for a compensating stability is maximum not unusual place with company as opposed to man or woman loans.

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