Noncurrent Liability

A noncurrent liability is a liability that is not expected to be settled within one year or the operating cycle, whichever is longer. Noncurrent liabilities are typically long-term debts, such as bonds payable, mortgages, and other loans. They can also include deferred income taxes, which are taxes that have been postponed until a later date.

Noncurrent liabilities are important to understand because they can have a significant impact on a company's financial health. For example, a company with a large amount of noncurrent liabilities may have difficulty obtaining financing in the future. Additionally, noncurrent liabilities can reduce a company's earnings per share, making it less attractive to investors.

There are a number of different ways to classify noncurrent liabilities. One common method is to divide them into two categories: debt and deferred credits. Debt includes all liabilities that are payable in cash, such as bonds payable, mortgages, and other loans. Deferred credits include all liabilities that are not payable in cash, such as deferred income taxes and unearned revenue.

Another way to classify noncurrent liabilities is by their maturity date. Short-term noncurrent liabilities are those that are due within one year or the operating cycle, whichever is longer. Long-term noncurrent liabilities are those that are due after one year or the operating cycle.

Noncurrent liabilities are an important part of a company's financial statements. By understanding the different types of noncurrent liabilities and how they are classified, investors can get a better picture of a company's financial health.