Non Current Assets Definition And Examples
We already study about Current Assets Definition And Examples, but here we study about Non Current Assets Definition And their Types And Examples.
Non Current Assets or Fixed Assets are those assets which have life more than one year and these are purchased by the business to use in the business’ offices. These Provide
benefit to the business for the long period of time and obviously it is more than one year.
Types of Non Current Assets
Tangible
Those which have physical existence, e.g., Plant & Machinery, Furniture, Office Equipment, etc
Intangible
Those which have no physical existence and can not be touched and seen. e.g., Goodwill, Franchise, Patents, etc.
Now, we come to the
Examples of Non Current Assets
Plant & Machinery
A company uses plant & machinery in the production department for the manufacturing of the goods sold to end customers. Depreciation is charged on Plant & Machinery on the
basis of Straight Line Method, Written Down Method or Diminishing Balance Method, Sum of Years’ Digits And Units of Activity Method.
Furniture & Fixtures
Furniture & Fixtures are used in the office of the business and these provide benefit to the business for the long period of time. These furniture make the working of the business
flexible. Depreciation is also charged on Furniture & Fixtures in order to estimate their useful life.
Land
Land is used for the construction of building of the company. It is the place where a physical business is constructed and mainly it is the head office of the business. The more suitable
place for the land, the more opportunities for the business to grow and ultimately the businesses get benefit from such suitable and valuable market place. So, land is also fixed or non current asset for the business.
Building
A land without building is almost nothing for carrying out the business operations. Building is constructed in the place of Land. Building is valuable and attractable the customers
if it is situated in the most favorable marketplace where customers can easily make Business Transactions and make business dealings. Obviously, this building is non current asset for the business as it provides benefits for the long period of time and not within
one year if the business is stabilized and can survive for the long period of time.
Long-Term Investments
Long-Term Investments are those which are invested for more than one year and obviously these can not be sold in the market within the current year. Examples are Bonds, Stocks, Marketable
Securities, etc.
Goodwill
What is Goodwill And Why Companies Pay For Goodwill In Case of Acquisition?
Goodwill is the good name or the image created in the mind of the customers due to brand quality. So, when a company purchased the business of another, the acquirer has to pay the
price of Goodwill as a premium value, because that acquired company has already a Goodwill in the market for customers and other competitors.
Patents
Patents provides benefits for the long period of time to the company. After purchasing patent rights from original creator, the company use it for business benefits.
Trademarks
A company uses words, logo, symbols and get registered with the registrar office and now that company uses this trademark and other company can not get registered with these logo,
words or symbols.
Trademarks are intangible assets that can be used for long period of time.
Franchises
Franchise is a license that a company purchases from the owner of the company in order to use the name, logo, trademark, etc of that owner of the company. The company that purchases
that license, obviously get benefits due the popularity and image of that owner of the company in the market.
Franchises are also Intangible Assets which provides benefit for the long period of time.
Copyrights
Copyrights is the legal right that creator can use its own created work and other can not copy his / her work. The company can buy the copyrights from the Creator and now use his
/ her work for commercial use. Now, Copyrights become an intangible asset for the company and it provides benefits for the long period of time.
Note: Intangible Assets are amortized rather than Depreciated as in case of Tangible Assets.
So, Non Current Assets are those which have life of more than one year and obviously these assets provide benefits for more than one year.
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