Answer (C) is correct.
Long-term obligations that are or will become callable by the creditor
because of the debtor’s violation of a provision of the debt agreement at
the balance sheet date normally are classified as current liabilities.
However, the debt need not be reclassified if the violation will be cured
within a specified grace period or if the creditor formally waives or
subsequently loses the right to demand repayment for a period of more
than a year from the balance sheet date (also, reclassification is not
required if the debtor expects and has the ability to refinance the
obligation on a long-term basis).