A noncurrent liability is a liability that is not paid within one year. It means, such liabilities will not become due within current financial year. So, we say such liabilities non current liabilities. Main examples of non current liabilities are long term loan, bonds, debentures, long term lease obligations, Employees' fund liabilities and fixed deposits of customers.
To know the correct meaning of non-current liabilities is so important to all business interested parties like businessman, management and investors. Businessman can take decision to reduce this liabilities and to utilize the fund from these liabilities after seeing its level in the balance sheet. Management can manage more fund from loan if this liability is so low and in the market, interest rates are so low. At that time, business can enjoy his trade on equity. Investors who want to invest money in the bonds or debentures or shares will see past non-current liabilities because if this fund is more than share capital and most of this fund is wasted in business losses, this information will help investors not to invest his money in such business.
There are also other measure of non-current liabilities. When we calculate the liabilities which we have to pay within present accounting year, then we deduct it from total liabilities, balance will be our non-current liability.
Important Fact
Most of people think that Product warranties are the current liability but it may be non-current liability if this financial obligation will settle after 12 month period of product selling. So, if obligation is more than 12 months, liability will be non-current liability.
Other Names of Non-Current Liability
We can also say non-current liability as long term liability or fixed liability.
Related : Current and Non-Current Liabilities Examples
To know the correct meaning of non-current liabilities is so important to all business interested parties like businessman, management and investors. Businessman can take decision to reduce this liabilities and to utilize the fund from these liabilities after seeing its level in the balance sheet. Management can manage more fund from loan if this liability is so low and in the market, interest rates are so low. At that time, business can enjoy his trade on equity. Investors who want to invest money in the bonds or debentures or shares will see past non-current liabilities because if this fund is more than share capital and most of this fund is wasted in business losses, this information will help investors not to invest his money in such business.
There are also other measure of non-current liabilities. When we calculate the liabilities which we have to pay within present accounting year, then we deduct it from total liabilities, balance will be our non-current liability.
Important Fact
Most of people think that Product warranties are the current liability but it may be non-current liability if this financial obligation will settle after 12 month period of product selling. So, if obligation is more than 12 months, liability will be non-current liability.
Other Names of Non-Current Liability
We can also say non-current liability as long term liability or fixed liability.
Related : Current and Non-Current Liabilities Examples
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