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What is a long-term liability?

Author:
Harold Averkamp, CPA, MBA

Definition of Long-term Liability

A long-term liability is an obligation resulting from a previous event that is not due within one year of the date of the balance sheet (or not due within the company’s operating cycle if it is longer than one year). Long-term liabilities are also known as noncurrent liabilities.

Examples of Long-term Liabilities

Some examples of long-term liabilities are the noncurrent portions of the following:

  • bonds payable
  • long-term loans
  • pension liabilities
  • postretirement healthcare liabilities
  • deferred compensation
  • deferred revenues
  • deferred income taxes
  • customer deposits

Some long-term debt that will be due within one year of the balance sheet date can continue to be reported as a long-term liability if there is:

  • a long-term investment that is sufficient and restricted for the payment of the debt, or
  • intent and a noncancelable arrangement that assures that the long-term debt will be replaced with new long-term debt or with capital stock.
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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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