Non Current Assets

Non Current Assets are assets or resources other than those that are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business.

Non Current Assets include:

• Cash and claims to cash that are restricted as to withdrawal or use for other than current operations, that are designated for the acquisition or construction of non-current assets, or that are segregated for the liquidation of long-term debts. The restricted cash should be reported on a separate line in the investments or other assets section as non-current assets.
• Marketable securities, including stocks, bonds, and long-term notes receivable that do not represent the investment of cash available for current operations. Even though a security may be readily marketable, if management does not intend to convert it to cash within one year or the company’s operating cycle, whichever is longer, it should be classified as a non-current asset. An availablefor-sale debt security with a maturity date that would otherwise cause it to be classified as a current asset should also be classified as a non-current asset if management does not consider it to be available for current operations. A held-to-maturity debt security is normally classified as a noncurrent asset until its maturity date is within one year or the length of the firm’s operating cycle, whichever is longer.
• Long-term investments or advances, whether marketable or not, made for the purpose of obtaining control, for affiliation, or other continuing business advantage.
• Property, plant, and equipment.
• Right-of-use assets obtained under lease agreements.
• Intangible long-term assets.
• Other long-term assets such as long-term prepaid expenses, prepaid pension cost, and receivables arising from unusual transactions not expected to be collected within twelve months.
• Contract assets that are not expected to be converted to cash within one year or the operating cycle, whichever is longer.
• Net deferred tax assets.
• The cash surrender value of life insurance policies on the lives of key employees.
• Other non-current assets not included in other categories, such as non-current receivables, longterm prepayments, and restricted cash or securities or assets in special funds.

Property, Plant, and Equipment (Fixed Assets)

Property, plant, and equipment (PP&E) are tangible assets used in operations that will continue to be used beyond the end of the current period. When the fixed assets are purchased, they are recorded at their cost, including shipping-in and installation costs needed to bring the asset to usable condition. The cost is then expensed over the life of the asset through depreciation, amortization, or depletion (except for land, which is not depreciated).

Examples of property, plant, and equipment include:

• Land, buildings, machinery, furniture, equipment, and vehicles
• Leasehold improvements, or improvements made to leased property at the lessee’s expense
• Assets obtained by means of a lease agreement
• Natural resources, such as gas, minerals, or timberland.

Natural resources other than land are depleted; property, plant, and equipment other than land are depreciated; and leasehold improvements are amortized. Land is not depreciated, amortized, or depleted because land is not used up and does not wear out.

Intangible Long-term Assets

Intangible assets do not have physical substance, but they provide benefit to the firm. Intangible assets may be either purchased or developed internally. However, because an asset recorded on the balance sheet comes about only by means of a prior transaction, internally generated intangible assets are not recorded on the balance sheet.

Examples of intangible assets are copyrights, patents, goodwill, trademarks, and franchises. An intangible asset with a limited life is amortized over its useful life. An intangible asset with an indefinite life, such as goodwill, is assessed periodically for impairment.