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Non-current asset

Also called: Fixed asset

What is a non-current asset?

A non-current asset is an asset the business keeps and uses for more than a year, such as a van, an oven or shop fittings.

The cost of an asset that wears out is shared over the years it is used. Each year's share is called depreciation.

In the statement of financial position it is shown at carrying amount: cost less accumulated depreciation.

Example

Shop fittings cost £10,000.00 and the accumulated depreciation is £4,000.00. The statement of financial position shows them at a carrying amount of £6,000.00.

Why it matters

Treating a non-current asset as an expense makes this year's profit too low. Treating a running cost as an asset makes it too high.

Practise it

  1. 1The statement of financial position for a sole trader10 min, hardFree
  2. Why assets are depreciated7 min, mediumPremium
  3. Capital or revenue expenditure10 min, mediumPremium
Module, 5 rooms, PremiumNon-current assets
Practise it nowThe statement of financial position for a sole trader

Ledger Drill is practice, not tax or accounting advice. If this looks wrong, tell us at [email protected].