Long-Term Liabilities on a Corporate Balance Sheet

Long-term liabilities are those that must be paid back in a time period of one year or more. On a balance sheet, you might see the following categories in the long-term liabilities section.

Notes payable category of long-term liabilities

When a company owes money that it expects to pay in a time period that’s longer than one year, the value of that money goes into a category called notes payable. Often this category includes all loans and debt that the company is expected to pay over the long run.

However, some companies choose to include any payments on bonds held for more than one year in a separate category called bonds payable.

Capital lease obligations category of long-term liabilities

When a company leases a piece of capital, the total amount owed on that lease adds to the value of the capital lease obligations category of liabilities. As the company gradually pays the lease, each payment causes a deduction from this liability.

Other long-term liabilities category

Any other debts that a company has to pay in a time period of one year or more and that don’t fit elsewhere on the balance sheet fall into the category called other long-term liabilities. As you may have already guessed, financial statements are designed to be easily understood, not creatively labeled.

blog comments powered by Disqus
Advertisement

Inside Dummies.com