What Are Long-Term Liabilities?

Long-term liability (long-term liability): refers to debts with a repayment period of one year or more than one business cycle, mainly including long-term loans, bonds payable, and long-term payables. ^[1]

Long-term liabilities

Long-term liabilities have the following characteristics:

First, the basic premise to ensure the repayment of long-term liabilities is that the company

Long-term liabilities can be classified according to different signs.

(1) According to the method of raising, it can be divided into

Valuation of long-term liabilities due to

Long -term debt

Borrow long-term loans

Borrow: bank deposit

Loan: long-term borrowing

2. Repayment of long-term loans

Borrow: long-term borrowing

Loan: bank deposit

3. Borrowing costs such as interest and exchange losses ^[5]

(1) The period of preparation

Borrow: long-term deferred expenses

Loans: long-term loans, etc. ^[5]

(2) It belongs to the period of production and operation

Borrow: financial expenses

Loans: withholding expenses, etc.

(3) The borrowing costs incurred in connection with the purchase and construction of fixed assets are incurred when the conditions for starting capitalization are met and before the fixed assets reach the intended usable state.

Borrow: construction in progress

Loan: long-term borrowing

(4) It belongs to the borrowing costs incurred in connection with the purchase and construction of fixed assets, which occurred after the fixed assets reached their intended use.

Borrow: financial expenses

Loan: long-term borrowing

The deposit interest on special borrowings related to the purchase and construction of fixed assets, which occurs before the purchase and construction of fixed assets reach their intended use, shall be offset against the construction costs of the purchase and construction of fixed assets. ^[5]

Long-term debt

1. Fixed assets financed by lease should be on the lease start date ^[6]

Borrowing: fixed assets-fixed assets leased under financing (prices determined in accordance with the lease agreement or contract, transportation costs, insurance premiums in the middle, installation and commissioning costs, and borrowing costs incurred before fixed lease assets under financing lease reach their intended use, etc.)

Loan: long-term payable (equipment price determined by lease agreement or contract)

Bank savings

Accounts payable (based on other related expenses payable) ^[6]

2. Payment of financial lease fees on schedule

Borrow: long-term payables

Loan: bank deposit ^[6]

3. When the lease term expires, if the contract stipulates that the ownership of the fixed assets will be transferred to the leased enterprise

Borrowing: Fixed assets-related detailed accounts

Loans: fixed assets-financing leased fixed assets ^[6]