13 Reporting Noncurrent Assets

A noncurrent asset is an asset that is not expected to be consumed within one year. Some noncurrent assets, such as land, may theoretically have unlimited useful lives. A noncurrent asset is recorded as an asset when acquired, rather than being charged to expense. In a capital-intensive industry, such as automobile manufacturing, a large part of the assets of the business may be noncurrent assets. On the other hand, a service business like an accounting firm that requires a minimal amount of fixed assets may have few or no noncurrent assets.

A class of noncurrent assets are intangible assets. These are assets that the business holds but do not have tangible form. Intangible assets include goodwill, brand recognition, copyrights, patents, trademarks, trade names, and customer lists. Some businesses further  divide intangible assets into two categories: intellectual property and goodwill.

Whether tangible or intangible, all noncurrent assets are presented on the balance sheet, and are listed after all current assets, but before liabilities and equity.

The figure below illustrates how noncurrent assets are presented on a balance sheet.