# Current Portion of Long Term Debt

Long term debt is debt which matures in more then one year. The current portion of long term debt sometimes abbreviated to CPLTD, is the principal amount of long term debt which is due within one year from the balance sheet date or within the normal operating cycle of a business.

It should be noted that the current portion of long term debt is not the same as short term debt. Short term debt is debt which matures in less than one year whereas the current portion of long term debt is long term debt which is repayable within one year of the balance sheet. ## Current Portion of Long Term Debt Example

Suppose a business takes out a three year loan at the rate of 6%. The loan will be paid back as shown in the debt amortization schedule below.

Debt amortization schedule
Year Interest Payment Balance
0 5,000
1 300 -1,871 3,429
2 207 -1,871 1,765
3 106 -1,871 0

The current portion of long term debt at the end of year 1 is calculated as follows.

At the start of year 1 the balance of the debt is 5,000, after adding interest of 300 (5,000 x 6%) and making a repayment of 1,871 the balance of long term debt at the end of year 1 is 3,429.

The current portion of this long term debt is the amount of principal which would be repaid in one year from the balance sheet date (i.e the amount which will be repaid in year 2). Looking at the debt amortization schedule the balance of the long term debt at the end of year 2 is 1,765 and the reduction in the principal balance over the year from the balance sheet date is 1,644 (3,429 – 1,765). This is the current portion of the long term debt at the end of year 1.

## Current Portion of Long Term Debt on Balance Sheet

At the end of year 1 the long term debt is 3,429 split between a current portion of long term debt (1,644) and a non-current portion of long term debt (1,765)

Principal balance long term debt
Amount
Current portion of long term debt 1,644
Non-current portion of long term debt 1,765
Long term debt 3,429

In the balance sheet at the end of year 1 the current portion of long term debt will be included under current liabilities and the non-current portion will be included under long term liabilities as shown in the following balance sheet extracts.

 . . . Accounts payable 2,000 Short term debt 1,000 Current portion of long term debt 1,644 Current liabilities 4,644 Long-term debt 1,765 Total liabilities 6,409 . . .

In the notes to the financial statements the net amount of long term debt shown in the balance sheet would be explained as follows.

Long term debt net of current portion
Amount
Long term debt 3,429
Current portion of long-term debt 1,644
Due beyond one year 1,765