Non-current assets are assets other than current assets, while current assets are assets which are expected to be realized in next 12 months or within normal operating cycle of a business.
Following are the major types of non-current assets:
There are certain alternative terms used to refer to non-current assets, for example fixed assets, long-term assets, long-lived assets etc.
Property, plant and equipment
These are the non-current assets having some physical existence. They are alternatively called tangible fixed assets. They are grouped into different classes such as land, land improvements, buildings, vehicles, etc.
Land is the site on which a building is erected or land improvements are made. Land improvements are structural additions made to land, such as parking lots, fences, landscaping, etc.
Intangible Fixed Assets
These are assets having no physical existence, such as patents, copyrights, goodwill, etc.
These include investments which are not expected to be realized in next 12 months. For example, H Ltd. has purchased 10-year bonds of S Ltd. of worth $5 million on Jan 1, 2010. Since these bonds will be paid back after 10 years, they are non-current as at December 31, 2010 and hence will be appear under long-term investments.
Written by Obaidullah Jan, ACA, CFA