Long-term liabilities
In one sentenceLiabilities due for settlement more than a year after the statement date, such as long-term bank loans and end-of-service benefits.
Simply put
These are debts that need not be repaid in the coming year, often used to finance long-lived assets such as buildings and equipment.
Each year, the part falling due within the following twelve months is moved from them to current liabilities.
Worked example
A factory borrowed 500,000 SAR, repayable in 5 equal annual installments, with the first installment due after one year.
Loan principal500,000 SAR
Annual installment500,000 ÷ 5 = 100,000 SAR
Current portion (next year's installment)100,000 SAR
Long-term portion (500,000 − 100,000)400,000 SAR
Don't confuse it with
Current liabilitiesWhat is settled within a year, including the next loan installment.