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Long Term Liabilities
Written by Kenny Foo   
Tuesday, 10 March 2009 10:56

Long term liabilities, as its name, are liabilities of a corporation which will be able to last more than one year.

On other words, corporations can take more than one years to settle these long term liabilities. In balance sheet, long term liabilities and current liabilities are all the liabilities for a corporation. Hence, sometimes, long term liabilities are also referred as non-current liabilities. Some instances of long term liabilities are long terms debts, debentures, mortgage loans, and other bank loans that are longer than one years for repayment. For examples, if corporation A has a bank loan which need to settle within 12 months, this is classified as current liabilities, while if the bank loan can take more than a year to settle, it is considered as long term liabilities. For individuals, long term liabilities are commonly house loans or car loans that can take several years to clear. The opposite for long term liabilities are fixed assets, which can be found in balance sheet too. Unlike return on equity ( ROE ), long term liabilities are excluded in return on net assets ( RONA ) calculations. The main difference for return on equity ( ROE ) and return on net assets ( RONA )is ROE includes long term liabilities, while RONA exclude long term liabilities.

 



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Last Updated ( Tuesday, 10 March 2009 11:52 )
 
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