The financial accounting term valuation of current liabilities refers to the approach used to quantify debt obligations that are reasonably expected to come due in a single operating cycle or one year. While most liabilities are recorded on the balance sheet at the present value of the future outlays of cash required to eliminate this debt, current liabilities are typically recorded at their full maturity amount.
Current liabilities are defined as debts that must be paid within one year or one operating cycle, whichever is longer. Generally, companies are required to calculate the worth of liabilities at the present value of the future cash flows required to extinguish this debt.
In APB Opinion No. 21 (now superseded by FASB Accounting Standards Codification Topic 105), Interest on Receivables and Payables, these calculations were explicitly excluded.
This Opinion is not intended to apply to:
For this reason, current liabilities should be recorded on the balance sheet at their full maturity value. This guidance applies to two classes of current liabilities: