What Are Other Long-Term Liabilities?
Other long-term liabilities are a line item on abalance sheetthat lumps together obligations that are not due within 12 months. These debts that are less urgent to repay are a part of theirtotal liabilities but are categorized as “other” when the company doesn’t deem them important enough to warrant individual identification.
Key Takeaways
- Other long-term liabilities are debts due beyond one year that are not deemed significant enough to warrant individual identification on a company's balance sheet.
- Other long-term liabilities are lumped together on the balance sheet rather than broken down one by one and given an individual figure.
- Some companies may disclose the composition of these liabilities in the footnotes to their financial statements if they believe they are material.
Understanding Other Long-Term Liabilities
Liabilities are debts that a company owes. They appear on the balance sheet and are categorized as either current—they must be paid back within a year—or long-term—they are not due for at least 12 months, or the length of a company’s operating cycle.
Then there are other liabilities. In financial statements, companies use the term “other” to refer to anything extra that is not significant enough to identify separately. Because they aren’t deemed particularly noteworthy, such items are grouped together rather than broken down one by one and ascribed an individual figure.
Other long-term liabilities can be defined as the rest of the debts that a company is required to pay back in a period of a year or more that are not separately accounted for and identified in the company's balance sheet.
Important
Some companies disclose the composition of these liabilities in their footnotes to the financial statements if they believe they are material.
In many cases, it is just a matter of presentation preference whether or not to itemize these material liabilities on the balance sheet or aggregate them under "other long-term liabilities” and break the entry down in the notes. Indeed, it is often possible to determine what makes up the specifics of other long-term liabilities on a balance sheet by consulting the footnotes within the company's 10-K filingorannual report. However, this isn’t always strictly necessary, meaning that not all companies will provide additional details of these particular obligations.
Types of Other Long-Term Liabilities
Other long-term liabilities might include items such aspension liabilities, capital leases,deferred credits, customer deposits, and deferred tax liabilities. In the case of holding companies, it can also contain things such as intercompany borrowings—loans made from one of the company's divisions or subsidiaries to another.
Special Considerations
Lumping together a group of debts without identifying the nature of the debt might sound like a potential red flag. In reality, this practice is normal and shouldn’t raise concern, provided that the obligations in question are relatively small compared to the company's total liabilities. They should also be comparable to how the company has operated in the past—sometimes, year-to-year comparisons of other long-term liabilities are provided in financial statement footnotes.
If the amount of other long-term liabilities as a percentage of total liabilities (as displayed on the balance sheet) is high enough to merit investigation, and there is no associated note, the analyst could call the investor relations (IR) contact to ask questions.
Example of Other Long-Term Liabilities
Ford Motor Co. (F) reported approximately $28.4 billion of other long-term liabilities on its balance sheet for fiscal year (FY) 2020, representing around 10% of total liabilities. In the notes to the financial statements, the main components were broken down into pension liabilities, other post-retirement employee benefits, employee benefit plans, dealers' customer allowances and claims, and others.
FAQs
Long-term liabilities are typically due more than a year in the future. Examples of long-term liabilities include mortgage loans, bonds payable, and other long-term leases or loans, except the portion due in the current year.
What are 10 liabilities? ›
Accounts payable, notes payable, accrued expenses, long-term debt, deferred revenue, unearned revenue, contingent liabilities, lease obligations, pension liabilities, and income taxes payable are the ten types of liabilities in accounting that provide information about a company's financial obligations and ...
Which of the following are examples of long-term liabilities? ›
Examples of long-term liabilities include:
- Bonds payable - often issued to finance long-term assets.
- Long-term loans - amounts borrowed for more than 12 months, such as a mortgage loan.
- Pension obligations - amounts due to employees after they retire in more than 12 months.
Other liabilities are the amounts owed to the public and are not reported elsewhere in the balance sheet.
What are liabilities and examples? ›
Liabilities are any debts your company has, whether it's bank loans, mortgages, unpaid bills, IOUs, or any other sum of money that you owe someone else. If you've promised to pay someone a sum of money in the future and haven't paid them yet, that's a liability.
What are the 8 current liabilities? ›
The most common current liabilities found on the balance sheet include accounts payable; short-term debt such as bank loans or commercial paper issued to fund operations; dividends payable; notes payable—the principal portion of outstanding debt; the current portion of deferred revenue, such as prepayments by customers ...
What are the five 5 most common current liabilities? ›
Current liabilities are the sum of Notes Payable, Accounts Payable, Short-Term Loans, Accrued Expenses, Unearned Revenue, Current Portion of Long-Term Debts, Other Short-Term Debts.
What are 3 common long-term liabilities? ›
Long-term liabilities are typically due more than a year in the future. Examples of long-term liabilities include mortgage loans, bonds payable, and other long-term leases or loans, except the portion due in the current year.
What are total long-term liabilities? ›
Total liabilities are all short-term and long-term business liabilities added together. Short-term liabilities are debts or obligations that must be paid within one year. Long-term liabilities are debts owed at a later date, usually more than a year in the future, often paid down in monthly or quarterly payments.
What is an example of a current and long-term liability? ›
Businesses sort their liabilities into two categories: current and long-term. Current liabilities are debts payable within one year, while long-term liabilities are debts payable over a longer period. For example, if a business takes out a mortgage payable over a 15-year period, that is a long-term liability.
Other long-term liabilities can be defined as the rest of the debts that a company is required to pay back in a period of a year or more that are not separately accounted for and identified in the company's balance sheet.
How to work out long-term liabilities? ›
The formula to calculate the long-term debt ratio is as follows. The sum of all financial obligations with maturities exceeding twelve months, including the current portion of LTD, is divided by a company's total assets.
What is an example of a long term provision? ›
The examples of Long-term Provisions are Provision for renewals and repairs, Provision for depreciation. A provision is termed as the cash amount, which is set aside from the business profits and the specific amount is used to cover the known liability of the businesses.
What are five liabilities? ›
Examples of Current liabilities: bills payables, trade payables, creditors, bank overdraft, outstanding or accrued expenses, short-term loans or debentures, etc.
What are known liabilities examples? ›
The most common known liabilities are accounts payable, sales tax payable, payroll liabilities, and contracted notes payable. All of these debts arise from contracts, agreements, or laws that state how much the company owes, whom it owes the money, and how much it owes.
What is an example of a liability in real life? ›
Current liabilities
They're the most common type of business liability. Examples of current liabilities include: Wages owed to employees. Interest payments for short-term credit purchases.
What are 10 current liabilities? ›
Some examples of current liabilities that appear on the balance sheet include accounts payable, payroll due, payroll taxes, accrued expenses, short-term notes payable, income taxes, interest payable, accrued interest, utilities, rental fees, and other short-term debts.
What are 10 non-current liabilities? ›
Non-Current Liabilities List
- Long Term Loans. ...
- Debentures. ...
- Deferred Tax Liabilities. ...
- Bonds Payable. ...
- Long Term Lease Obligations. ...
- Product Warranties. ...
- Pension Benefit Obligations. ...
- Other Non-Current Liabilities.
The most common current liabilities are:
- Accounts payable: These are the yet-to-be-paid bills to the company's vendors. ...
- Interest payable: interest expense that has already been incurred but has not been paid. ...
- Income taxes payable: the income tax amount owed by a company to the government.
