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General Accounting Discussions: Long Term Liability

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  1.  
    • CommentAuthorlorelee
    • CommentTimeJun 9th 2008
     
    Is there a dramatic downside to not accounting for a long term liability,( Balance Sheet ) instead expensing it directly every month ? We are not in a position to take a $200k hit in one period.
    Any comments would be appreciated.

    Thanks
    • CommentAuthormomma4_5
    • CommentTimeJun 9th 2008
     
    If you took out a loan or something, there was cash or something that you received in return. When you have this happen you make an entry to record the cash or assets and the accompanying liability. Then according to your amortization schedule you expense the interest and decrease your payable every month.

    I guess that I am not understanding why you would not want this on your balance sheet???
    Thankful People: lorelee
    • CommentAuthorlorelee
    • CommentTimeJun 9th 2008
     
    Hi..

    Thanks for your response.
    This is actually a judgement where we pay $5k a month for 3.5 years. It is to my understanding that in order for this to be on the Balance Sheet, I have to expense for the $200k liability. We cannot take a $200k hit in this period, yet I am uneasy about it NOT being on the Balance Sheet.

    Ideas ?

    Thanks very much

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