Noncurrent liabilities are debts and other obligations that a company does not expect to settle within twelve months of the balance sheet date, or within its operating cycle if longer. Typical examples are long-term bank loans, bonds payable, mortgages, long-term lease liabilities, pension obligations and deferred tax liabilities. The term is another name for long-term liabilities, which covers their types and accounting in more detail.
How the term is used
A classified balance sheet separates current liabilities from noncurrent liabilities. Noncurrent liabilities is the wording used in IFRS and in many US company reports, while long-term liabilities and long-term debt are common in general usage. The portion of a long-term loan that falls due within the next year is moved out of noncurrent liabilities and reported as the current portion of long-term debt.
Classification rules can be important. Under US GAAP, short-term obligations may be shown as noncurrent if the company intends to refinance them on a long-term basis and has the ability to do so, for example through a signed financing agreement before the statements are issued. Under IFRS, following amendments to IAS 1 effective from 2024, a liability is noncurrent only if the company has a right at the reporting date to defer settlement for at least twelve months. Breaching a loan covenant can make long-term debt immediately repayable, forcing reclassification to current and sharply weakening liquidity ratios. Analysts use noncurrent liabilities in measures of solvency such as the debt-to-equity ratio.