Current liability
A current liability is an obligation a business will settle within its operating cycle or twelve months of the reporting date — trade payables and short-term borrowings are the standard examples classified this way under IAS 1.
FrameworkIAS 1
See it move
A company's year-end current liabilities sum four items due within twelve months: trade payables of €4,800, a bank overdraft of €1,300, accrued wages of €900, and the current portion of a five-year loan, €2,000. Together these total €4,800 + €1,300 + €900 + €2,000 = €9,000. The loan's remaining €8,000 stays classified as non-current.
The formula
Variables
- Total current liabilities (€)
- Trade payables (€)
- Accruals (€)
- Bank overdraft (€)
- Current portion of long-term borrowings (€)
Sums the standard current-liability line items to the total current liabilities reported on the balance sheet.
Check yourself
A company's year-end records show trade payables of €6,200, accrued electricity costs of €450, and a €24,000 bank loan taken out three years ago, repayable in equal annual instalments over six years from when it was taken out (three instalments remain outstanding). What amount should be classified as current liabilities?