Non-Current Assets | Meaning, Calculation and Presentation

What are Non-Current Assets?

Non-current Assets can be defined as those assets that are relatively permanent and are needed for the production or sale of goods or services. Non-current assets are those assets that can not be intended to be converted into cash within 1 year. They are purchased with the objective of increasing the working capacity, and they are expected to help the entity by increasing their business income.

Non-current assets are capitalised instead of being expensed out, it is carried as a balance sheet item on the asset side and their value is reduced by allowing depreciation over their useful life. Non-current assets can also be characterised as an asset that will economically benefit for more than one financial year in the future. Non-current assets can be either tangible or intangible. Examples of tangible Non-Current assets can be Plant, Property and Equipment, machinery, etc. and examples of Non-Current intangible assets can be Intellectual property, Softwares, Copyrights, etc.

How to Calculate Non-current Assets?

Non-current assets can be calculated by the following formula:

Non-current Assets = Total Assets – Current Assets

Or

Non-current Assets = Fixed Assets (Tangible + Intangible) + Non-current Investments + Long-term Loans and Advances

Example:

From the information given of the company XYZ Ltd. for the year ending 31^st March 2023, Calculate Non-Current Assets.

Additional Information:

• Depreciation to be charged on property, Plant, and equipment is 15%
• Depreciation to be charged on Intangible Assets is 10%
• Long-term assets have been appreciated by ₹65,000.
• Goodwill remains unchanged.

Solution:

In the Books of XYZ Ltd. for the year ending 31^st March 2023

So to calculate Non-Current Assets entity may follow a series of steps:

• Determine all the Assets that are owned by the Entity during any Accounting Year.
• Separate all the Assets based on their characteristics and Relevant Holding Period between Current Assets and Non-Current Assets.
• Determine their Individual Carrying Amount for the Respective Accounting Year
• Adjust their carrying value by applying the applicable rate of Depreciation and Any Revaluation (if any).

How Non-current Assets are shown in the Balance Sheet?

A Balance Sheet reveals key financial information, the financial position of any entity and their business net worth, hence it is important for any entity to report fair value of assets. A company needs to list its Non-current assets and separate its balance sheet according to the type of asset.