In its December 31, 2021 balance sheet, the company reports the $67 million debt as a $13 million current liability and a $54 million long-term liability in the balance sheet.
Given,
Abc company has a $67 million liability at December 31, 2021.
Of which $13 million is payable in 2022.
Current liability is the obligation or liability that are due within a year(12months). For instance, accounts payable.
Whereas long-term liability is the obligation that has a life span of more than a year (that is it takes more than a year to settle them). Example, bonds.
The opening balance for debt January 1st 2022 is $67 million.
$13 million is a current asset because it will be repaid within 2022 calendar year (within a year).
Thus,
$67 million - $13 = $54 million
$54 million will definitely be a long-term liability.
Long-term liabilities are also called long-term debts, which are debts a company owes third-party creditors that are payable beyond 12 months to that creditor.
Hence, $54 million is the long-term liability.
To learn more about long-term liabilities here:
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