Long-Term Liabilities Definition And Their Examples

Here we discuss about Long-Term Liabilities Definition And Their Examples. Previously we discussed about Current Liabilities And Their Examples.

Long-Term Liabilities

Long-Term Liabilities are those Liabilities that having life more than one year or that mature more than one year. Long-Term Liabilities arise from the acquisition of Major Expenditures. For Example, Purchase of Land From Loan, Purchase of Buildings From Bank Loan, Purchase of Another Company, etc.

Business Transactions related to Long-Term Liabilities are occurred very few in number in the life of company businesses.

Examples of Long-Term Liabilities

1. Bank Loans

Entrepreneurs get personal loans from banks for starting small businesses and theses loans mature more than one year or expires after the accounting cycle of the business. There are many examples of getting personal loans from banks by small business owners to start their business.

2. Long Term Debts

All those debts which are taken by the entrepreneur for more than one year or for long period of time during the operating cycle of the business are called Long-Term Debts. These debts include Bonds Payable, Mortgage Loans, Long-term Notes Payable.

(i) Bonds Payable

Bonds are issued to general public with the purpose of transferring the amount of huge loan into small transferable units called bonds. Bonds are issued for financing larger projects such as purchasing of another company or establishing business on larger scale or adds an additional line of product on large scale, etc.

(ii) Long-Term Notes Payable

Purchase of heavy equipment such as electronic devices requires long-term debts by issuing long-term Notes Payable. So, the company pays the amount of long-term loan in installments either monthly, quarterly, semi-annually or on annual basis.

(iii) Mortgage Loans

What is Mortgage Loan

A mortgage loan is the amount which is given by the lender (usually a Bank) to borrower against the property or Real Estate so that the borrower will repay the loan within specified period of time and the borrower will eventually hold the ownership of the Real Estate or Property.

Mortgage Loans are paid off after long period of time. Mortgage on Property or Real Estate and Mortgage on Motor Vehicles are big examples. For Example, we see that many companies gets mortgage Loans on Cars or any Motor Vehicles, etc, for raising funds.

So it is all about Long-Term Liabilities And Their Examples. Now, you are in a position to understand this topic in a better way.