Long-term Liabilities

Long-term liabilities are liabilities to certain parties that must be repaid within a period of more than one accounting period (1 yr) calculated from the date on which the balance sheet as of December 31. Payments made with cash but can be replaced with a specific asset. In normal operations the company, long-term debt account is never charged by the transaction of cash. At the end of the accounting period of a certain part of the long-term debt turned into a short-term debt. To that must be adjusted to move the long-term debt maturities into short-term debt

Incidence of Long Term Debt
When developing enterprise-scale operations or in building a company needed some funds. The funds required for investment in fixed assets that will provide benefit in the long term should be obtained from long-term debt or to raise capital. In this case the company has two options, namely attractive long-term debt such as bonds or increase their own capital by issuing shares.
There are several advantages attract long-term debt through bonds rather than increase their own capital by issuing shares.

1. Advantages attractive bond
The bondholders do not have voting rights in company policies that do not affect management.
2. Interest on the bonds may be lower than the dividend to be paid to shareholders.
3. Interest is the fee charged to companies that may reduce tax liability while the dividend is a distribution of profit that can not be deducted as expenses.

Conversely there are also things that are less favorable among others:

1. Interest on bonds is a fixed expense in both the state enterprise for profit or suffer losses
2. If companies can not afford to pay the bond at maturity, bondholders still have the right to demand repayment of the bonds while the shareholders have no such rights because shareholders are the owners of companies that also are responsible to bear the risk of loss company.

Types of Long Term Debt
Broadly speaking, long-term debt are classified in two groups, namely:

1. Mortgage Debt: Debt arising in connection with the acquisition of funds from loans secured by real estate. In the agreements mentioned property the borrower is pledged as collateral in the form of land or buildings. If the borrower does not repay on time, the lender can sell the collateral, which then accounted for by debt.
2. Bonds: Debt arising in connection with funds raised through the issuance of bonds. Buyers of the bonds referred to bondholders. In a letter posted bond nominal value of bonds, interest per year, the date of redemption of bonds and other provisions appropriate type of bonds.