Long-term debt includes any financial obligations lasting more than 1 year. The two most common items are bonds, which are covered in this chapter, and leases, which are covered in Accounting for Fun and Profit: Understanding Advanced Topics in Accounting.
A bond represents a contract between two parties: the borrower (issuer) and the lender (purchaser). This chapter takes the perspective of the firm issuing the bond (i.e., borrowing the money), which makes the bond a liability on the Balance Sheet (increase cash and debt). A mirror image of the discussion applies if the firm purchases another firm’s bonds (and the bond would be an asset).
Corporate bonds are typically payable over long periods of time, normally ranging ...
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