Noncurrent liabilities are obligations that are payable for a period beyond one year. They are usually taken to finance long-term investments. Therefore, they include all company’s obligations that will become due for duration beyond one year of the balance. From Apple Inc.’s 2018 annual report consolidated balance sheet, long term liabilities items identified are the term debts, deferred revenues, deferred tax, and long term tax payable.
The term debts denote the firm’s liabilities that cannot become due within one year of the balance sheet date. In this case, ‘debt’ is used to mean liabilities as used in the financial ratios. The term debts may include vehicle loans, capital lease obligations, pension, bonds payable, and other post-retirement benefits. Short-term debts that are due within one year can be reported as non-current liabilities in the balance sheet if the company has intentions of refinancing the debt and is provable within twelve months without decreasing the working capital.
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Another item is the deferred revenues, which is settlement received in advance for services or goods not yet delivered. In the balance sheet, they are presented as liabilities because it represents an item that is not yet earned, thus, being owned by the customer. It can only be classified as an asset upon delivery of goods or services. Deferred revenue is vital in accurate reporting of assets and liabilities in the company’s balance sheet. It ensures that unearned income is not treated as an asset since the deferred cash is at risk until the work is performed. However, they are essential as they finance the company without using other assets or drawing on a credit line. Therefore, the above-mentioned element is classified as non-current liability because it is due in a period over one year.
The last item is long term tax payable and the deferred tax. Long term tax payable is a tax obligation that will last for over one year. They are presented in the balance sheet as long-term liabilities when the firm has scheduled to pay it for period over twelve months. Deferred tax is the tax due within this period but has not yet been paid. It is classified as a liability in the balance sheet because it is not owned by the company, but it is the property of the revenue authority. Therefore, it is a long-term liability when it is due after twelve months.
