Month End Glossary

Non-Current Asset

A non-current asset is a type of asset that is expected to provide economic benefits to a business for an extended period, typically more than one year.

In accounting and financial reporting, non-current assets are assets that a company expects to hold and use over the long term, rather than convert into cash or consume within a year. These assets are vital for the operations of a business, as they often include items crucial to the production process or service delivery.

Examples of non-current assets include land, buildings, machinery, vehicles, patents, and trademarks. For instance, a manufacturing company might have machinery as a non-current asset, as it is used to produce goods over several years. Non-current assets are reported on the balance sheet, often under categories such as "Property, Plant, and Equipment" or "Intangible Assets".

Understanding and managing non-current assets is crucial for businesses to ensure proper depreciation, amortization, and impairment assessments, as these impact financial performance and reporting. Together with current assets, non-current assets form the total assets of a company, reflecting its long-term investment and operational capacity.

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