Non-Current Liability is the company’s obligation which is expected to be paid after a year period and the list of examples of which includes long term loans and advances, debenture, long term obligations for lease, deferred revenue, product warranty, bonds payable and other Non-Current Liabilities.
List of Non-Current Liabilities Examples
Non-current liabilities are those liabilities which are not liable to be paid within 12 months. Here is the complete list of Non-current liabilities examples-
Non-Current liabilities are reported on the balance sheet of the Company on the Liability side.
List of Non-Current Liabilities Explained in Detail
Let us now discuss each one them in detail- :
#1 – Debentures
The first example of non-current liabilities is Debentures. Debentures are a common form of long-term debt instruments which are issued by the Company and does not have the backing of any physical asset. Debentures are backed by the creditworthiness and reputation of the Company. Large Companies frequently issue debentures to secure funding for the Company. Although debentures do not have any collateral, bond investors purchase them with a belief that the Company will pay them back time and with interest/coupon attached with the debentures. Since there is no collateral, debentures are generally issued at a higher rate of interest that other secured funding options.
#2 – Long Term Loans
Long term loans are the loans that the Company has to pay over a longer period which is more than 1 year. Long term loans are provided by financial institutions and traditional banking institutions and mostly backed by collateral. Long term loans are provided to high creditworthy Companies and have a lesser rate of interest which also depends on the creditworthiness of the borrower.
#3 – Bonds Payable
Bonds payable are similar to debentures but with a difference that they are backed by physical assets and have collateral. Bonds payable are a form of long-term debt which is issued by the Company to get funds for itself. The Company backs the bonds with collateral such that the bond investors invest into secured funding instruments.
#4 – Deferred Tax Liabilities
Deferred tax liability is another non-current liability example, which the Company owes to the tax department. Tax liabilities occur because of the difference in the timing between when the tax is paid and when it is accrued. Deferred tax liabilities on the balance sheet provide a forecast that the future tax outlay by the Company will be more thus reducing the net profit.
#5 – Long Term Lease Obligations
Capital leases which are payable after more than 12 months are recorded as long-term lease obligations. Since the rental arrangements are recorded under assets, capital leases are recorded under liabilities on the balance sheet. These leases are to be paid by the Company for the property, plant or any equipment which it does not own and has rented from other Company.
#6 – Pension Benefit Obligations
Pension benefit obligations are the amount of pension owed to the employees of the Company once they retire from the Company. The Company accumulates the amount until the employees retire and pay the amount on their retirement or over the years after retirement. Since these obligations also last over years they are recorded under long term liabilities as pension benefit obligations.
#7 – Product Warranties
Most manufacturing and goods Companies provide product warranties on their goods for years. They take the cost on themselves if the product defaults for 2-3 years. Hence, the Companies report a non-current liability for such costs on repair or replacement of defaulted products which they expect can come up for repairment over the period of warranty.
#8 – Other Non-Current Liabilities
Other non-current liabilities include any other liabilities which are cannot be classified under the above-mentioned categories. Details of such liabilities are provided by the Company in the notes to financial statements.
List of Non-Current Liabilities of Apple Inc
Consider the non-current liabilites example of Apple.com for the year ended September 2018
Source:- Apple Inc
Considering the example of Apple Inc., we will discuss the list of non-current liabilities:
Major highlights from the Apple Inc. balance sheet is:
- Total non-current liabilities increased by 0.89% from $ 140,458 Mn to $ 141,712 Mn from Sep. 2017 to Sep. 2018
- Deferred revenue decreased by 1.375% from $ 2,836 Mn to $ 2,797 Mn from Sep. 2017 to Sep. 2018
- Term debt decreased by 3.57% from $ 97,207 Mn to $ 93,735 Mn from Sep. 2017 to Sep. 2018
- Other non-current liabilities increased by 11.79% from $ 40,415 Mn to $ 45,180 Mn from Sep. 2017 to Sep. 2018
Non-Current liabilities are a type of liabilities which are to be paid by the Company after 12 months or more. Non-current liabilities are generally paid using the non-current assets and the revenue generated and accumulated by the Company over the period of time.
This has been a guide to List of Non-Current Liabilities Example. Here we provide the explanation of the list of Non-Current Liabilities on balance sheet along with an example of Apple Inc. You can learn more about financing from the following articles –
- Journal Entry Examples of Deferred Revenue
- Definition of Stock Warrant
- Warranty Expense
- Financial Statement | Top 10 Limitations
- Top 10 Best Users of Financial Statements
- Liabilities Examples
- Liabilities Accounting Meaning
- Long-Term Liabilities Examples
- Financial Liabilities Examples
- Current Liabilities Formula