Non Current Assets

What are Non-Current Assets?

Non-Current Assets are basically long-term assets having bought with the intention of using them in the business and their benefits are likely to accrue for a number of years. These Assets reveal information about the investing activities of a company and can be either Tangible or Intangible. Examples include Fixed Assets such as Property, Plant, Equipment, Land & Building, Long-term Investment in Bonds and Stocks, Goodwill, Patents, Trademark etc.

Non Current Assets

Types of Non-Current Assets

Non-Current Assets are usually classified into three parts:

Non-Current Assets Types

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Source: Non Current Assets (

#1 – Tangible Assets

Assets that physically exist, i.e., which can be touched. Tangible Assets are usually valued at Cost Less Depreciation. Tangible Assets ExamplesTangible Assets ExamplesAny physical assets owned by a firm that can be quantified with reasonable ease and are used to carry out its business activities are defined as tangible assets. For example, a company's land, as well as any structures erected on it, furniture, machinery, and more include Land, Property, Machinery, Vehicles, etc. However, it is worthwhile to note that not all Tangible Assets depreciate in value. Examples are like the land is often revalued over a period in the Balance Sheet of the Company. Also, have a look at Net Tangible AssetsNet Tangible AssetsNet Tangible Assets is the value derived from the company's total assets minus all intangible assets. Net Tangible Assets per share is calculated by dividing the net assets by the outstanding number of equity more

#2 – Natural Resources:

These assets have an economic value derived from Earth and used up over time. Examples include Oil fields, mines, etc

#3 – Intangible Assets

Assets that do not physically exist but has economic value falls under this category. For an asset to be categorized as Intangible, the following criteria must be satisfied:

  • It must be Identifiable.
  • The organization must have the means to obtain economic benefits from such an asset.

An intangible asset can be generated internally by the business, or it can be acquired by way of separate purchase (through mergers vs. AcquisitionsMergers Vs. AcquisitionsMerger refers to the consolidation of two or more business entities into one single joint entity with a new management structure, ownership, and name that capitalizes on its competitive advantage and synergies, whereas acquisition is the case where one financially strong entity takes over or acquires a less financially strong business entity by acquiring all shares or shares worth more than 50% of the total value of its more, etc.). Intangible Assets Examples include Goodwill, Patent Trademark, etc. Intangible AssetsIntangible AssetsIntangible Assets are the identifiable assets which do not have a physical existence, i.e., you can't touch them, like goodwill, patents, copyrights, & franchise etc. They are considered as long-term or long-living assets as the Company utilizes them for over a year. read more are recorded in the Balance Sheet according to the cost or Revaluation Model (Discussed in detail below). However, it is pertinent to note that Goodwill is not amortized Is Not AmortizedGoodwill amortization refers to the process in which the cost of the goodwill of the company is expensed over a specific period of the time i.e., there is a reduction in the value of the goodwill of the company by the way of recording of the periodic amortization charge in the books of more but tested for impairment at least annually, and an impairment loss is recognized in those cases where carrying value exceeds the fair value of the intangible asset.

List of Non-Current Assets (Examples)

Example of Non-Current Assets

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#1 – Property Plan and Equipment

Property, Plant, and Equipment (PP&E) are long-lived non-current assets used in the production or sale of other assets.

non current assets (PPE)

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The cost of PP&E includes all expenditures (transportation, insurance, installation, broker cost, search cost, legal cost) that are necessary to acquire and ready them for use. If the plant is constructed, all the material, labor costLabor CostCost of labor is the remuneration paid in the form of wages and salaries to the employees. The allowances are sub-divided broadly into two categories- direct labor involved in the manufacturing process and indirect labor pertaining to all other more, overheads, interest cost during construction included in the Cost of PP&E.

#2 – Natural Resources

These include natural resources like Oil and Gas, Metals like Gold, Silver, Bronze, Copper, and more.

non current assets - Oil Reserves


#3 – Intangible Assets like Patents, Copyrights, etc

“Other intangible assets” examples primarily include corporate intellectual property such as patents, trademarks, copyrights & business methodologies. Intangible Assets on the balance sheetThe Balance SheetA balance sheet is one of the financial statements of a company that presents the shareholders' equity, liabilities, and assets of the company at a specific point in time. It is based on the accounting equation that states that the sum of the total liabilities and the owner's capital equals the total assets of the more are recognized only when they are bought from an external entity, not if they are developed internally. Note that “other intangible assets” are amortized.

non current assets - Intangibles

source: Alphabet SEC Filings

As we note from above, Google’s assets example includes intangible assets worth $3847 million and $3307 million in 2015 and 2016, respectively.

#4 – Goodwill

When one company buys another company, it is buying more than just assets on a balance sheet. It’s also buying some intangibles, like the quality of the employees and client base, reputation, or brand name. It implies that the firm purchasing another business pays more than the fair market value of the business assets. If the excess purchase price cannot be attributed to patents, brands, copyrights, or other intangible assets, it is recorded as Goodwill.

non current assets - Goodwill

source: Amazon SEC Filings

We note from above that Amazon’s assets example includes Goodwill of $3759 million and $3784 million in 2015 and 2016, respectively.

#5 – Long Term Investments

When an investor buys securities in the financial markets, they purchase with a hope that they will appreciate in value and pay a return.

non current assets - Long Term Investments

source: Alphabet SEC Filings

Alphabet’s non-current asset example of long-term investments includes non-marketable investments of $5,183 million and 5,878 million in 2015 and 2016, respectively.

Purchase of Debt Securities like loans or bonds

  • The company records the purchase as an investment on its balance sheet

Purchase of Stock / Shares

  • If shares of another company are purchased and have controlling interest (this usually means owning more than 50%), then the company needs to consolidate (combine) its accounts with the other company
  • If the company does not own a controlling interest, then the company must include the shares as investments on its balance sheet

#6 – Other Long-Term Assets

In many financial statements, you will find this item, whose explanation is entirely missing. You may need to know what is the proportion of “Other Assets” to “Total Assets.” If it is significant, then an analyst may want to clarify the same with the management.

non current assets - other assets

source: Amazon SEC Filings

Reporting of Non-Current Assets in the Balance Sheet

Non-Current Asset IFRSUS GAAP
Property, Plant, and EquipmentCost Model or Revaluation ModelCost Model
Intangible AssetsCost Model or Revaluation Model. Research cost is expensed, the development cost is capitalizedBoth Research and Development Costs are Expensed

Cost Model Approach

Under this model, a non-current asset is reported at amortized cost. Amortized Cost is computed by subtracting Accumulated DepreciationAccumulated DepreciationThe accumulated depreciation of an asset is the amount of cumulative depreciation charged on the asset from its purchase date until the reporting date. It is a contra-account, the difference between the asset's purchase price and its carrying value on the balance more, amortization from the Historical Cost of the Asset. Historical Cost is the total cost of the asset, including purchase price and any other cost incurred to get the asset ready for use, such as installation. 

Let’s understand the same with an example:

  • ABC purchased Plant and Machinery on 01.4.2017 for $100000 and spent Rs 5000 towards the installation of the same. Depreciation for the year is $9500. Under Cost Model, Plant and Machinery will be reported for $95500 (100000+5000-9500) on 31.03.2018.

Revaluation Model Approach

Under this approach, an asset is reported at the Fair value less any accumulated depreciation. If initial Revaluation results in a loss, the initial loss is recognized in the Income Statement. Any subsequent Revaluation gain would be recognized in the Income Statement to the extent of previously reported loss. Surplus revaluation gain beyond the initial loss is recognized in the Shareholder’s Equity as Revaluation Surplus.

Let’s understand the same with an example:

ABC purchased Plant and Machinery on 01.4.2016 for Rs 800000. As on 31.03.2017, the machinery had a fair value of Rs 720000. As on 31.03.2018, machinery had a fair value of Rs 810000. In such a case as per the Revaluation Model, Revaluation gain will be reported as follows:

NON-Current Assets (Revaluation gain)


Non-Current Assets are an integral part of any business. They act as the wheels for the smooth running of the business. However, the portion of the asset base comprising of long term assets varies industry-wise. Usually, Capital Intensive IndustriesCapital Intensive IndustriesCapital intensive refers to those industries or companies that require significant upfront capital investments in machinery, plant & equipment to produce goods or services in high volumes and maintain higher levels of profit margins and return on investments. Examples include oil & gas, automobiles, real estate, metals & more, such as Oil Production, Telecommunication, and Automotive, etc., will have a higher composition of their asset base of long term assets compared to companies in the financial sector.

Video on Non-Current Assets

This article has been a guide to Non-Current Assets and its definition. Here we discuss the types and list of non-current assets examples (property, plant, and equipment, natural resources, Goodwill, intangible, long-term investments, and other assets. We also discuss its reporting on the balance sheet using the cost model and the revaluation model. You may also have a look at the following articles to learn more about basic accounting –