To illustrate the current portion of long term debt, let's assume that a company's loans payable are $100,000 of principal. You need to look at the loan repayment schedules and add up the principal amounts that must be paid within one year of the balance sheet date. Let's assume that these principal payments due within one year amount to $18,000. This $18,000 will be reported as a current liability and the remaining $82,000 will be reported as a long term liability.
An exception for reporting the $18,000 as a current liability exists if the company will 1) be using $18,000 of a long term asset that was restricted for the purpose of repaying the debt; or, 2) the company has a noncancelable agreement for refinancing the $18,000 with long term debt or issuance of stock.
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