The security deposit paid to another entity is a current asset, if the security deposit will be returned within one year of the balance sheet date. The entity holding the security deposit will report it as a current liability, if it is to be repaid within one year of the balance sheet date.

If the security deposit will not be returned within one year of the balance sheet date, the security deposit is reported as a long-term asset by the entity paying the security deposit. The party holding the security deposit will report it as a long-term liability if it will not be returned within one year of the balance sheet date.

Learn more about the Balance Sheet.

About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the creator of the AccountingCoach Pro which has been praised for its ability to simplify accounting in a way that anybody can understand.

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