Noncurrent Assets

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Definition of 'Noncurrent Assets'

Noncurrent assets are assets that are not expected to be converted into cash within one year. They are also known as long-term assets or fixed assets. Noncurrent assets include property, plant, and equipment; intangible assets; and investments.

Property, plant, and equipment are physical assets that are used in the production of goods or services. They include land, buildings, machinery, and equipment. Intangible assets are assets that do not have physical substance, such as patents, copyrights, and goodwill. Investments are assets that are held for the purpose of generating income or appreciation in value.

Noncurrent assets are important to a company's financial health because they provide the foundation for its operations. They are also a source of long-term financing. However, noncurrent assets can also be a liability if they are not managed properly. For example, if a company has too much invested in property, plant, and equipment, it may not be able to generate enough cash flow to cover its expenses.

Noncurrent assets are reported on a company's balance sheet. The balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. The balance sheet lists a company's assets, liabilities, and equity.

The noncurrent assets section of the balance sheet is typically divided into two categories: property, plant, and equipment; and intangible assets. Property, plant, and equipment are listed in order of their expected useful life. Intangible assets are listed in order of their importance to the company.

The noncurrent assets section of the balance sheet is important because it provides information about a company's long-term financial health. It shows how much money the company has invested in its assets and how those assets are expected to generate cash flow in the future.

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