What Are Noncurrent Assets?

What Are Noncurrent Assets?

By Charles Joseph | Editor, Financial Affairs
Reviewed by Corey Michael | Senior Financial Analyst

Noncurrent assets, also referred to as long-term assets, are investments that a company expects to hold onto for at least a year. They include tangible assets such as land, equipment, machinery, and buildings. These are often essential for the running of a business and are not expected to be converted to cash in the near future. Noncurrent assets also include intangible items such as brand recognition, patents and trademarks.

Related Questions

1. How are noncurrent assets different from current assets?

Current assets are short-term assets that a company expects to convert into cash within one year or less. In contrast, noncurrent assets are long-term investments that are expected to add value to the company over a longer period of time.

2. How are noncurrent assets valued?

Want More Financial Tips?

Get Our Best Stuff First (for FREE)
We respect your privacy and you can unsubscribe anytime.

Usually, noncurrent assets are valued at their purchase cost. Over time, a depreciation expense is computed to account for wear and tear. The resulting value, known as book value, is less than the original cost due to accumulated depreciation.

3. Are noncurrent assets considered fixed assets?

Yes, noncurrent assets can be considered as fixed assets since they can’t be converted quickly into cash. They are seen as long-term investments for the company, utilized over an extended period.

4. How do noncurrent assets affect the balance sheet?

On the balance sheet, noncurrent assets are typically long-term investments that are capitalized rather than expensed. This means their cost is recognized over the course of their useful life, not all at once at the time of purchase.

5. What happens when a noncurrent asset is sold?

When a noncurrent asset is sold, the company must account for the difference between the sale price and the book value of the asset. If the asset is sold for more than its book value, the company records a gain. If it’s sold for less than book value, the company records a loss.