Non-current liabilities
Non-current liabilities are debts your business doesn’t need to repay within 12 months, like long-term loans.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- Non-current liabilities are debts you don’t have to settle within 12 months of your balance sheet date. They’re also called long-term liabilities.
- The part of a long-term loan due in the next 12 months is a current liability. Only the remaining balance counts as non-current.
- In Indonesia, Statement of Financial Accounting Standards (PSAK) 201 sets the classification rules. PSAK 118 replaces it from 1 January 2027.
- Comparing these debts with your cash flow and equity shows whether you can meet future repayments. It also shows how much room you have to borrow and grow.
What are non-current liabilities?
Non-current liabilities are debts your business owes that aren’t due for payment within 12 months of the balance sheet date. They’re also called long-term liabilities, or liabilitas jangka panjang in Indonesian.
The test comes down to your right to delay payment. If you can put off paying a debt for at least 12 months after the end of your reporting period, it’s non-current.
Picture a five-year bank loan you took out to buy a delivery van. The instalments due this coming year are short-term debt, while the rest of the balance is a non-current liability. Lenders and investors look at that longer-term balance to judge your long-term solvency.
Non-current vs current liabilities
Current liabilities are debts due within 12 months, while non-current liabilities fall due later. The split shows how much cash you’ll need soon compared with over the coming years.
Current liabilities usually include supplier bills, wages owed, tax payable and short-term loans. Longer-term finance, such as multi-year loans and leases, sits in the non-current group.
One loan can sit in both groups. Repayments due in the next 12 months form the current portion of long-term debt, and the rest stays non-current.
You’ll still make payments toward long-term debt during the year, so build them into your budget. An accurate split also keeps your current ratio reliable, since it compares current assets with current liabilities.
Examples of non-current liabilities
Most small businesses carry at least one long-term debt, often a loan or a lease. Common examples include:
- bank loans repayable over more than 12 months
- bonds or notes payable that mature after 12 months
- the non-current portion of lease liabilities, such as for premises or vehicles
- deferred tax liabilities
- long-term employee benefit obligations, such as severance pay
- lines of credit with repayment terms beyond 12 months
A line of credit can be current or non-current, depending on when the facility must be repaid. Check your facility agreement to see which applies to you.
Non-current liabilities on the balance sheet
Long-term debts appear in the liabilities part of your balance sheet, usually after current liabilities. Alongside equity, they show how much of your business is funded by longer-term borrowing.
The layout you use depends on which standard from the Indonesian Institute of Accountants (IAI) you follow. Entities applying PSAK 201 generally show short-term and long-term liabilities separately.
Private entities have their own standard, the Financial Accounting Standards for Private Entities (SAK EP). SAK EP took effect in 2025, according to PwC Indonesia’s guide to 2024 standards. It replaced the Financial Accounting Standards for Entities Without Public Accountability (SAK ETAP).
Many small businesses use the Financial Accounting Standards for Micro, Small and Medium Entities (SAK EMKM). Under SAK EMKM, you may present current and non-current liabilities separately, but it’s your choice. Whichever standard applies, your balance sheet is one of your core financial statements, so lenders will read it closely.
How to calculate non-current liabilities
You can work out your total from your loan and lease agreements and your tax records. Here’s how to do it at each balance sheet date:
- List every debt and obligation your business has at the balance sheet date
- Check the repayment terms of each one to find the amounts due within 12 months
- Move those amounts into current liabilities
- Add up the remaining balances to get your long-term total
If your balance sheet already shows totals, there’s a shortcut: subtract current liabilities from total liabilities.
Say your café in Bandung has Rp600 million outstanding on a bank loan, with Rp120 million due in the next 12 months. You also have a Rp90 million lease liability, with Rp30 million due within a year.
You also owe Rp15 million in deferred tax and Rp25 million in severance obligations. Your long-term total is Rp580 million: Rp480 million from the loan, Rp60 million from the lease, plus the tax and severance amounts.
The Rp150 million due within 12 months goes into current liabilities. You’d use the Rp580 million figure when working out your gearing ratio.
Accounting standards for non-current liabilities in Indonesia
The IAI sets the rules that decide how you classify these debts. Recent changes renamed the main standard and clarified the classification test.
The IAI renumbered PSAK 1 as PSAK 201, Presentation of Financial Statements, effective 1 January 2024. The IAI also moved the start of its 2020 amendment on classifying liabilities as short or long term to that date. A second amendment on long-term liabilities with covenants took effect on 1 January 2024 too.
Under these rules, a debt is long term if, at the reporting date, you have a real right to defer payment for 12 months or more. Your plans to repay early don’t change the result, as this guide to current and non-current classification explains.
Loan covenants you must meet only after the reporting date don’t affect classification at that date. You’ll still need to disclose the risk that those loans could become repayable within 12 months.
A further change is coming. The IAI ratified PSAK 118, based on International Financial Reporting Standards (IFRS) 18, on 28 May 2025. It replaces PSAK 201 from 1 January 2027.
Why non-current liabilities matter for your business
Long-term debts shape your cash flow for years, so they belong in your planning today. Tracking them helps you decide when to borrow, invest or repay.
Add your scheduled loan and lease repayments to your cash flow forecast. Comparing those payments with expected income shows whether you can pay future debts and still fund growth.
Two ratios put these debts in context. The debt-to-equity ratio, also called gearing, weighs your total debt against your equity. The debt-to-asset ratio divides your total debt, both current and long-term, by your total assets.
Track long-term debt with Xero
Knowing what you owe and when it’s due helps you plan repayments and borrow with confidence. Xero turns your accounting data into an easy-to-read balance sheet and other financial reports. You can see short-term and long-term debts at a glance.
Bank feeds keep your figures up to date, and you can share them with your accountant in real time. Start tracking your debts in one place when you get one month free.
FAQs on non-current liabilities
These answers cover questions that often come up once you start classifying your debts.
Are deferred tax liabilities always non-current?
Yes. When you show current and non-current liabilities separately, International Accounting Standard (IAS) 1 paragraph 56 says deferred tax liabilities can never be classed as current.
Does the current portion of a loan change each year?
Yes. At every balance sheet date, you move the next 12 months of repayments into current liabilities. The long-term balance shrinks as the loan nears its end.
Should you split your liabilities if you use SAK EMKM?
It’s optional, but showing the split gives lenders and your accountant a clearer view of what’s due soon. It also makes your debt ratios easier to compare each year.
Are contingent liabilities non-current?
No. A contingent liability, such as a possible legal claim, depends on an uncertain future event, so it isn’t recognised on the balance sheet. Instead, you disclose it in the notes, unless the chance of payment is remote.
Related terms
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.