Long-Term Liabilities

An entities debts and obligation that are not due within one year or business cycle, whichever is longer. A liability is an obligation that is settled by a future forfeit of asset or opportunity; it is an unavoidable obligation; and the event that created the obligation has already occurred. These obligations normally require a formal agreement which includes covenants and restrictions for the protection of both lenders and borrowers. Important issues of long-term liabilities should be disclosed in the notes of financial statements.

Bonds Payable

Bonds payable are an obligation of the issuer to a pay a sum of money at a future date, and periodic interest. Bonds are a debt instrument issued by an entity to borrow funds from the general public and institutional investors.

Long-Term Notes Payable

Notes payable are written promises to pay a defined amount of money on a specified date. If the note is not due in the current cycle it is classified as a long-term liability.

Mortgages Payable

A mortgage is a debt instrument secured by the collateral of specified real property. They are commonly used to finance the acquisition of property, plant and equipment. Over a period of years the borrower repays the loan plus interest. Although the mortgage is considered a long-term debt, the installments due during the current operating cycle are current liabilities.