Current & Non-current asset

Asset

*an asset is defined as a "resource controlled by an entity as a result of past event and from which future economic benefits are expected to flow to the entity"

*An asset is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.

Break down of asset

1.Current asset

2.Non current as

 Current asset

*Current assets are balance sheet accounts that represent the value of all assets that can reasonably expect to be converted into cash within one year. 

*A current asset is cash and any other company asset that will be turning to cash within one year from the date shown in the heading of the company's balance sheet.

*Current assets are also referred to as short term assets.

*No depreciation have been charged on current asset

*Example of current asset

• 1. Cash and Cash Equivalents
  • Cash on Hand - consists of un-deposited collections
  • cash in bank- made up of bank accounts that are unrestricted as to withdrawal
  • Short-term cash funds such as Petty Cash Fund, Payroll Fund, Tax Fund, etc.
  • Cash Equivalents are short-term investments with very near maturity dates making them assets that are "as good as cash".
• 2. Trading Securities or "Financial Assets at Fair Value"
  • Trading Securities are investments in stocks that are held with the purpose of trading (speculative investments)
• 3. Trade and Other Receivables
  • Accounts Receivable - receivables from customers arising from rendering of services or sale of goods
  • Notes Receivable - receivables from customers which are backed up by promissory notes
  • Other receivables representing claims from other parties such as: Rent Receivable, Interest Receivable, Dividend Receivable, etc.
  • Allowance for Bad Debts - a contra-asset account deducted from Accounts Receivable. It represents the estimated noncollectable amount of the receivable.
• 4. Inventories
  • Inventories are current assets that are held for sale in the normal operations of the business. A service business normally has no inventory account.
  • Merchandising businesses normally maintain one inventory account –Merchandise Inventory.
  • Manufacturing businesses have several inventories: Raw Materials Inventory,Work in Process Inventory, Finished Goods Inventory, and Factory Supplies Inventory.
• 5. Prepaid Expenses/Prepayments
  • Prepayments consists of costs already paid but are yet to be used or incurred. Common prepaid expense accounts include: Office Supplies, Service Supplies,Prepaid Rent, and Prepaid Insurance.

*Non-Current Assets

*A non-current asset is an asset that is not likely to turn to unrestricted cash within one year of the balance sheet date. (This assumes that the company has an operating cycle of less than one year.)

*Non-current assets are company's long term investment in the case that the full value will not be realized within the accounting year.

*Resource that is not expected to be consumed or sold within the normal

operating cycle of a firm, such as equipment machinery, and plant

*Depreciation must be charged over the non-current asset based on its useful life

1. Property, Plant, and Equipment (PPE) also 

known as Fixed Assets

• • PPE includes tangible assets that are expected to be used for more than one year. PPE accounts include: Land, Building, Machinery, Service Equipment,Computer Equipment, Delivery Equipment, Furniture and Fixtures, Leasehold Improvements, etc.
  • Take note that land that is not used by the business in its operations but is rather held for appreciation is not part of PPE but of investments.
  • Accumulated Depreciation - a contra-asset account deducted from the related PPE account. It represents the decrease in value of the asset due to continuous use, passage of time, wear & tear, and obsolescence.
• 2. Long-Term Investments
  • Investment in Long-Term Bonds, Investment in Associate, Investment in Subsidiary, Investment Property, Long-Term Funds; these are investments that are intended to be held for more than one year.
• 3. Intangibles
  • An intangible has no physical form but from which benefits can be derived and its cost can be measured reliably.
  • Intangibles include Patent for inventions, Copyright for authorship, compositions and other literary works,Trademark, Franchise, Lease Rights, and Goodwill.
• 4. Other Non-Current Assets
  • Assets which cannot be classified under the usual non-current asset categories
  • Includes: Advances to Officers, Directors, and Employees not collectible within one year, Cash in Closed Banks, and Abandoned or Idle Property