What Is Long-Term Debt? Definition and Financial Accounting
These loans typically have 15 or 30 year terms, so the borrower won’t actually pay off the entire balance and retire the loan in the current period. Additionally, a liability that is coming due may be reported as a long-term liability if it has a corresponding long-term investment intended to be used as payment for the debt. However, the long-term investment must have sufficient funds to cover the debt. Current Portion of Long Term Debt: Balance Sheet Example The current portion of long-term debt is the portion of a long-term liability that is due in the current year. For example, a mortgage is a long-term debt because it is typically due over 15 to 30 years. They should be listed separately on the balance sheet because these liabilities must be…
