Current Loans Payable
<p ><strong>
Definition: </strong>A loan is an arrangement under which the owner of property (usually cash) allows another party the use of the property in exchange for an interest payment and the return of the property at the end of the lending arrangement. The loan is documented in a promissory note. If any portion of the loan is still payable as of the date of a company's balance sheet, the remaining balance on the loan is called a loan payable.
If the principal on a loan is payable within the next year, it is classified on the balance sheet as a current liability. Any other portion of the principal that is payable in more than one year is classified as a long term liability. If the <a href="http://www.accountingtools.com/covenant-definition" >covenant</a> on a loan has been breached, but the lender has waived the covenant requirement, it could still mean that the entire amount of the loan is technically payable at once, in which case it should be classified as a current liability.
The interest that a company will owe on a loan in the future is not recorded in the accounting records; it is only recorded with the passage of time, as the interest owed becomes an actual liability.</p>