What is a long-term asset?

A long-term asset is an asset that will not turn into cash or be consumed within one year of the date shown in the heading of the balance sheet. (If a company has an operating cycle that is longer than one year, a long-term asset will not turn to cash within the longer operating cycle.) Expressed another way, a long-term asset is an asset that does not meet the criteria of being reported as a current asset.

Long-term assets are also known as noncurrent assets and include the following:

  • long-term investments These include certain investments in stocks and bonds of other corporations, a company's bond sinking fund, the cash surrender value of life insurance policies owned by the company, real estate awaiting to be sold, etc.
  • property, plant and equipment This classification includes land, buildings, machinery, equipment, vehicles, fixtures, etc. that are used in the business.
  • intangible assets These include trademarks, patents, customer lists, goodwill, etc. that were acquired in a transaction.
  • deferred charges This category might include deferred income taxes that pertain to certain noncurrent assets.

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