Non-current assets are assets that are not expected to be converted into cash within a year and are reported on a company's balance sheet (sometimes as "long-term assets").
These assets can be either operating or non-operating, depending on whether they are directly related to the company's core business operations or not...: let's see some examples of them and when they are non-operating.
✦ Property, Plant, and Equipment (PPE):
• Manufacturing equipment used in the production of goods
• Buildings used for the operation of the business, such as offices or factories
• Land used for the production or storage of goods
Examples of Non-operatings are...
• Surplus or unused land or buildings not being used for business operations
• Vacation homes or other non-business properties
• Equipment or machinery not necessary for business operations
• Unused or underutilized warehouses or storage facilities
✦ Intangible assets, such as patents, trademarks, copyrights, and goodwill:
• Trademarks or brand names used in the company's core business operations
• Patents related to the company's products or services
• Copyrights related to the company's marketing materials or software.
Examples of Non-operatings are...
• Unused or underutilized patents, trademarks, or copyrights
• Goodwill related to a business combination that is not actively contributing to the company's operations
• Trademarks or brand names that are not used in the company's core business operations
• Non-business-related software or technology patents
• Intellectual property related to products or services that are no longer offered.
✦ Investments in other companies or subsidiaries:
• Investments in subsidiaries or joint ventures that contribute to the company's core business operations
• Investments in suppliers or distributors that are critical to the company's supply chain
• Investments in companies that provide strategic benefits, such as access to new markets or technologies.
Examples of Non-operatings are...
• Investments in unrelated companies that are not part of the company's core business operations
• Investments in companies that have ceased operations or are no longer active
• Investments in non-business-related ventures, such as real estate or art collectionsInvestments in charitable organizations or non-profit entities
• Personal investments made by executives or shareholders.
✦ Long-term investments in stocks, bonds, or other securities:
• Investments in securities related to the company's core business operations, such as industry-specific funds or stock in key suppliers
• Investments in securities that provide strategic benefits, such as access to new markets or technologies
• Investments in securities that generate income or help manage risk.
Examples of Non-operatings are...
• Investments in securities that are not used for trading or other active purposes
• Investments in non-business-related ventures, such as real estate or art collections
• Investments in charitable organizations or non-profit entities
• Investments in non-business-related mutual funds or other investment vehicles.
✦ Deferred tax assets, such as tax credits or losses that can be used to reduce future tax liabilities:
• Tax credits or losses related to the company's core business operations, such as research and development or investment in new technologies
• Tax credits related to sustainable practices or energy efficiency
• Tax losses related to the company's operations or investment strategies.
Examples of Non-operatings are...
• Tax credits or losses that are not directly related to the company's core business operations
• Tax assets that are not expected to be utilized in the foreseeable future
• Tax credits related to charitable donations or other non-business-related activities
• Tax credits related to non-business-related research and development activities.
✦ Long-term prepaid expenses, such as insurance premiums or rent paid in advance:
• Prepaid expenses related to the company's core business operations, such as rent for manufacturing facilities or insurance for key assets
• Prepaid expenses related to the company's research and development activities or new product development
• Prepaid expenses related to marketing or advertising campaigns.
Examples of Non-operatings are...
• Prepaid expenses for non-business-related insurance policies or premiums
• Prepaid rent for non-business-related properties or facilities
• Prepaid expenses for non-business-related services or subscriptions
• Prepaid expenses related to personal travel or entertainment
• Prepaid expenses related to non-business-related educational or training programs.
✦ Long-term loans receivable, such as loans made to employees or other companies:
• Loans made to suppliers or distributors to ensure a stable supply chain
• Loans made to customers to facilitate sales or financing of the company's products or services
• Loans made to employees to support relocation or training for key positions.
Examples of Non-operatings are...
• Loans made to parties that are not directly related to the company's core business operations
• Loans made to executives or affiliates for personal use
• Loans made to non-profit or charitable organizations
• Loans made to support non-business-related ventures or activities
✦ Non-current portions of lease agreements or other long-term contracts:
• Lease or contract obligations related to the company's core business operations, such as manufacturing facilities or distribution centers
• Lease or contract obligations related to the company's research and development activities or new product development
• Lease or contract obligations related to marketing or advertising campaigns
Examples of Non-operatings are...
• Lease or contract obligations related to non-business-related properties or facilities
• Lease or contract obligations related to personal investments or hobbies
• Lease or contract obligations related to non-profit or charitable organizations
• Lease or contract obligations related to non-business-related travel or entertainment
• Lease or contract obligations related to non-business-related educational or training programs.
✦ Deposits or advances made for future purchases or services:
• Deposits or advances related to the company's core business operations, such as deposits for raw materials or equipment purchases
• Deposits or advances related to the company's research and development activities or new product development
• Deposits or advances related to marketing or advertising campaigns.
Examples of Non-operatings are...
• Deposits or advances for non-business-related purchases or services
• Deposits or advances for non-profit or charitable organizations
• Deposits or advances for non-business-related travel or entertainment
• Deposits or advances for non-business-related educational or training programs.
✦ Other non-current assets, such as deferred charges or miscellaneous asset:
• Deferred charges related to the company's core business operations, such as legal fees or consulting fees for new product development
• Deferred charges related to the company's research and development activities or investment in new technologies
• Miscellaneous assets related to the company's core business operations, such as licenses or permits required for operation.
Examples of Non-operatings are...
• Deferred charges related to non-business-related expenses, such as legal fees or consulting fees
• Deferred charges related to non-business-related research and development activities
• Miscellaneous assets not directly related to the company's core business operations, such as art collections or investments in sports teams
• Advances made to employees or executives for personal use or investments
• Non-business-related receivables, such as refunds or reimbursements for personal expenses.
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