Noncurrent Liabilities

Noncurrent liabilities represent obligations of the firm that generally are due more than one year after the balance sheet date. The major portion of noncurrent liabilities consists of notes and bonds payable. In addition, deferred income tax payments are an important component of liabilities for many companies. Each of these types of liabilities is discussed in the following sections.

Other types of noncurrent liabilities that are included in financial reports are more controversial in nature. The acceptable methods of accounting and reporting for these controversial items have changed substantially in recent years and continue to evolve. For this reason, Chapter, “Additional Issues in Liability Reporting,” is devoted to a discussion of controversial areas in liability reporting including accounting for leases, pensions, and post-employment benefits.

At the end of this chapter

  1. Recognize the types of noncurrent obligations that are reported by business firms.
  2. Comprehend features of long-term borrowing contracts, such as notes and bonds payable.
  3. Determine periodic interest expense and the valuation of noncurrent obligations in financial reports.
  4. Appreciate why income is measured differently for income tax and financial reporting purposes.
  5. Understand why the tax basis and the financial reporting basis of assets and liabilities may differ.
  6. Interpret financial statement measurements of income tax expense and deferred income tax liability.

Noncurrent Liabilities Contents

Long-Term Notes Payable

Bonds Payable (Long-Term Bonds Payable)

Financial Reporting for Income Taxes

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