Non-current assets

The non-current assets or fixed assets of a company are made up of all the Company assets that do not become effective in a period exceeding one year.

In simpler words, non-current assets are made up of those assets that have a useful life of more than one year. It is a part of the asset, within the balance sheet of a company.

Characteristics of non-current assets

Non-current assets are durable and illiquid, because it takes time to convert them into cash. They are an important element in the economic structure of the company, but being long-term investments, they do not serve to obtain liquidity (money) for the company in the short term. They are resources that serve the business in the long term, such as a premises, a van, computers, a patent, etc.

The idea is to keep them in the company for a long period of time. For example, machinery used in the manufacture of furniture or an industrial warehouse suffer little wear and tear and have a very long useful life. Keep in mind that although they are durable they are not eternal.

It is important to note that the value of an asset in the accounting books is the purchase price, including the purchase costs and discounting the annual depreciation of that asset. Depending on the type of assets that a company has in its non-current assets, we can guess what activity it is engaged in.

Classification of non-current assets

Among non-current assets we have:

• Long-term financial investments: For example the acquisition of long-term fixed income securities, shares and capital contributions.
• Fixed assets: It includes real estate, personal and useful property, equipment, machines, land, intangibles, etc. The real estate forms the non-current asset except if it is a real estate company, which is dedicated to buying and selling real estate. In that case, they would be current assets.
• Intangible assets: They are those that cannot be physically quantified but that produce or may produce benefits for the company. For example, the rights of use of industrial or intellectual property, or a patent.