Liabilities

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Insurance Journal  Mar 27  Comment 
Deutsche Lufthansa AG may face unlimited liability for payments to families of victims of the Germanwings jet crashed by its suicidal co-pilot, according to lawyers. “The liability for the victims would be uncapped,” said George Leloudas, a...
Insurance Journal  Mar 20  Comment 
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MarketWatch  Mar 19  Comment 
Target agreed to pay $10 million to settle a consumer class-action lawsuit in the wake of its 2013 data-breach incident. But that’s only a sliver of the total expenses related to the breach that the company has estimated it will wind up paying out.
Insurance Journal  Mar 19  Comment 
ACE Group has enhanced its premises pollution liability (PPL) and premises pollution liability portfolio (PPL Port) insurance policies to provide additional coverages for environmental day-to-day operational exposures faced by both domestic and...
Insurance Journal  Mar 18  Comment 
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Insurance Journal  Mar 4  Comment 
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Insurance Journal  Mar 3  Comment 
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Financial Times  Mar 2  Comment 
Tobacco group and auditor part company after 17 years




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A liability is an accounting term for anything of value a company or an individual owes. Liabilities can include financial liabilities usually debt or fixed goods which have yet to be delivered. Publicly-traded companies are required to list a summary of their assets and liabilities every quarter on their balance sheet, where accounting rules determine how liabilities are categorized and valued. The opposite of a liability is an asset - something of positive value, or something the company owns.

Types of Liabilities

From an accounting perspective, liabilities are divided into two broad categories:

Current Liabilities

Current liabilities are debts or obligations which are due within a year. Current liabilities are reported on the company's balance sheet and include Short-Term Debt, accrued liabilities and Accounts payable.

  • Short-term bank loans: which are a form of short-term debt that the company takes out.
  • Accounts payable: which is money owed to a company, for a good or service. This includes unpaid bills.

By the principle of prudence, current liabilities are reported in the balance sheet at their least favorable valuation.

Long-Term Liabilities

Long-term liabilities are liabilities that will not be paid off or are not due within a year. Long-term liabilities are also reported on the company's balance sheet and include items such as long-term bank loans and bonds issued by the company. They are generally subject to interest payments. Examples include: company cars, computers and investment in another company.

References

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