Current Portion of Long-term Debt
The amount of long-term debt principal due within one year, reclassified as a current liability to accurately reflect short-term payment obligations.
Current Portion of Long-term Debt
The amount of long-term debt principal that is due within one year or the operating cycle, reclassified from long-term to current liabilities.
For instance, a company with a $1 million loan payable over 5 years would classify $200,000 as current portion of long-term debt if that amount is due within the next 12 months, with the remaining $800,000 shown as a long-term liability.
This reclassification ensures the balance sheet accurately reflects upcoming payment obligations. It affects liquidity ratios and working capital calculations, providing financial statement users with a clearer picture of short-term cash requirements for debt service. The current portion typically increases as loan maturity approaches unless refinancing occurs.