Long-term Items

There are several long-term items both on the asset & liability side of a company's balance sheet. In this unit, we will discuss the same.

Other Long-Term Items Overview

Use as a ‘catch-all’ for remaining balance sheet items
- Long-term items without drivers
Create line items
Reference historical balances
Forecast balances
- Keep balances constant if drivers are not easily recognizable

Long-Term Items

Asset side

Long-term loans and advances
Other non-current assets
Deferred tax assets

Liability side

Deferred tax liability
Long-term provisions
Other non-current liabilities
Forecasting Future Balances

Deferred Tax Assets (DTA) and Deferred Tax Liabilities (DTL) are for temporary differences between your taxable income as per the Companies Act and taxable income as per the Income Tax Act. If you are paying more tax today but pay less tax in future, then you will build Deferred Tax Assets. If you are paying less tax today but have to pay more in future, then you will build Deferred Tax Liabilities.

Keep long term items constant for projected years if you have no drivers.
Usually, these items will have no drivers.
When projecting, never input the numbers – always link to historical numbers. These are also called flat lined references. It is just linked to the actual historical financials.

Linking Other Long-Term Items

Once the schedule is set- calculate cash flows on the basis of changes in long-term items.
Link the change to the cash flow statement.
Link the ending amount of forecasted other long terms items to the balance sheet.