What is Long-Term Debt?

Long-term debt is a financial obligation for which payments will be required after one year from the measurement date. This information is used by investors, creditors, and lenders when examining the long-term liquidity of a business.

Presentation of Long-Term Debt

Long-term debt is classified in a separate line item in a company's balance sheet, in the long-term liabilities section. As portions of long-term debt become due for payment, they are reclassified as short-term debt. A sample presentation of long-term debt in a balance sheet appears in the following exhibit.