Classification of Non-current Assets

Question 1

What are ‘tangible’ assets?

Answer 1

Assets that have physical substance and are held for use in:
- The production or supply of goods/services.
- For rentals to others.
- Administrative purposes.
on an accounting basis in the reporting entity’s activities.

Question 2

What are ‘intangible’ assets?

Answer 2

Non-financial assets that don’t have physical substance but can be identified and are controlled by the entity through custody or legal rights.

Question 3

What are ‘investments’?

Answer 3

Assets held on a long-term basis.

Question 4

How are non-current assets valued?

Answer 4

They’re valued at their historical cost less the accumulated depreciation from the state of acquisition to the statement of financial position.
(written down value / netbook value / net carrying amount).

Question 5

What is ‘historical cost’?

Answer 5

Legal expenses, extensions and improvements in the case of buildings.

Question 6

What is ‘depreciation’?

Answer 6

It’s the allocation of the cost of a non-current asset over accounting periods which compromises it’s useful economic life to the business.