CandleFocus Glossary Editor
Other long-term liabilities are debts that are not significant enough to have individual identification on a company’s balance sheet and are due beyond one year. These liabilities are usually lumped together on the balance sheet as either a “total other long-term liabilities” or “long-term liabilities, not elsewhere classified.” The allocation of these liabilities consists of many different types of liabilities such as income tax payable, deferred-acquisition costs, post-employment benefits, and others.
Income tax payable refers to the tax that a company must pay for the current and past years. Companies may record deferred income tax liabilities on their balance sheet until the taxes owed from a transaction are paid. Deferred acquisition costs are costs that a company has incurred related to a purchase of another company, such as commissions paid to a broker or solicitor, as well as costs incurred in the registration of the equity securities sold. Post-employment benefits are retirement benefits provided by the company, such as pension liabilities, that relate to services performed by employees.
Include any other long-term liabilities that may not be pertinent to the above categories, such as long-term lease obligations, long-term promissory notes, deferred indebtedness, Judgment liability, and litigation reserve. Long-term lease obligations are commitments that the company has made to lease equipment or property for a period longer than 12 months. Long-term promissory notes are notes that are payable over a period of more than twelve months. Deferred indebtedness are debt that is held by the company which will be paid sometime in the future with interest. Judgement liability represents the amount of liability associated with any jury, court and/or other judgement against the company. Lastly, a Litigation reserve is an account set up by the company to reserve funds for potential litigation.
Overall, other long-term liabilities can provide a good indication of the financial outlook for the company and the potential risks it faces. Companies should review their other long-term liabilities on a regular basis in order to anticipate any financial problems that may arise. Companies should also review the composition of their other long-term liabilities to ensure they are able to fulfill their long-term commitments and avoid any material risks that may arise as a result of them.
Income tax payable refers to the tax that a company must pay for the current and past years. Companies may record deferred income tax liabilities on their balance sheet until the taxes owed from a transaction are paid. Deferred acquisition costs are costs that a company has incurred related to a purchase of another company, such as commissions paid to a broker or solicitor, as well as costs incurred in the registration of the equity securities sold. Post-employment benefits are retirement benefits provided by the company, such as pension liabilities, that relate to services performed by employees.
Include any other long-term liabilities that may not be pertinent to the above categories, such as long-term lease obligations, long-term promissory notes, deferred indebtedness, Judgment liability, and litigation reserve. Long-term lease obligations are commitments that the company has made to lease equipment or property for a period longer than 12 months. Long-term promissory notes are notes that are payable over a period of more than twelve months. Deferred indebtedness are debt that is held by the company which will be paid sometime in the future with interest. Judgement liability represents the amount of liability associated with any jury, court and/or other judgement against the company. Lastly, a Litigation reserve is an account set up by the company to reserve funds for potential litigation.
Overall, other long-term liabilities can provide a good indication of the financial outlook for the company and the potential risks it faces. Companies should review their other long-term liabilities on a regular basis in order to anticipate any financial problems that may arise. Companies should also review the composition of their other long-term liabilities to ensure they are able to fulfill their long-term commitments and avoid any material risks that may arise as a result of them.