Non-current liabilities

Unlike the current liabilities, non-current liabilities have their maturity (= period during which the full payment due shall be made), usually within more than one year after the balance sheet date (= date, usually at the end of the accounting period) when the books were closed (= bottom lines were calculated) and the balance sheet created,  and necessarily reconciled (= verified, that all items or entries have been correctly posted or carried to the accounts to which they belong).

Included among non-current liabilities, for example, may be capital lease, securities redeemable in the future, notes payable, mortgage payable.

Capital lease enables a company to purchase a costly fixed asset and pay back for it in installments (= regular, scheduled payments consisting of principal and interest.

Principal means main part of the loan.). Actually, it resembles individual’s car lease, whereby at the end of the lease period the lessee (who purchased the property on lease) becomes its legitimate owner. Thus, the company having eventually paid up for the asset leased, will become its legitimate owner.

Securities are freely tradable debt instruments that are backed by company’s assets. Shares of stock are a common type of marketable securities.

Notes payable are written promises to pay to the creditor. Oftentimes, they are based on the reciprocal trust of the both parties, and may not have any backing with corporate assets. Thus, they merely serve as promises to pay, and as such can also be called promissory notes.

Mortgage means any loan taken for purchasing some real estate. Ordinarily, it is also repaid over a long period of time and, thus, carried on the balance sheet as a non-current liability.