What is a long term asset?

Asset which remains for a long period of time and benefits the company such as plant building machinery etc

We are no longer using the term long term assets or fixed instead we use NON CURRENT ASSETS as per IAS1 preparation and presentation of financial statements. Non currents which include tangible and intangible assets are those whose economic benefit expected to flow into the entity for more than a one financial year. Tangible assets includes property plant and equipments and these are guided in IAS16 and intangibles includes Goodwill are guided by IAS38. All these assets are supposed to be tested for impairement as per IAS36 when they met the condition stated therein.

An assets from which economic benefits are expected to be flow to entity for more than one year

Long Term assets are those non-current assets which are not intended to turn into cash equivalents within one year. These are known as Fixed Assets (movable, immovable and intangible) or capital assets. It includes PPE (Property, Plant & Equipment), long term investments etc.

Long term assets/Non current assets are those that are not ordinarily held for sale in the normal course of business and will usually be used by the business for more than one year. These are also the ones whose cost will be amortised over their determined useful lives. Examples would be land (usually not depreciated), buildings, property, plant and equipment etc.

The assets; which utility / benefits will be derived for more than one year is considered as long term asset. It is called fixed asset, example: Plant & Machinery, Land & Building, Furniture & Fixture, Vehicle, Long term investment, Goodwill etc.

 

The assets which gives you profit more than one year in other word the asset whose life is more than one year will be considered as Long Term Asset.

Any non-current asset is classified as long term asset. Long term asset are used or operated more than1 year. These assets cannot be easily converted into cash.

Ex., Property,  Plant, Equipment,  Long - term investment, intangible assets(patent, good will)...

 

         IAS16(International Accounting Standard-16) gives detailed explanation on PPE(Property, Power,  Equipment). According to IAS16, Plant and Equipment outlines the accounting treatment for most types of property, plant and equipment. Property, plant and equipment is initially measured at its cost, subsequently measured either using a cost or revaluation model, and depreciated so that its depreciable amount is allocated on a systematic basis over its useful life.

A long term asset is one the use of which can result in cash in-flows to the organization for more than1 year.